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Partnering for Impact

Partnering for Impact:

How Social Service and Community Based Organizations Can Navigate Change in the New Medicaid Landscape

In Brief: Key Strategies for SSO/CBO Success in the New Medicaid Era

The Medicaid landscape is evolving under significant federal funding constraints and a heightened focus on fiscal efficiency. For Social Service Organizations (SSOs) and Community-Based Organizations (CBOs), this creates a critical imperative: to transition from valued service providers to indispensable, strategic partners for state Medicaid agencies and Managed Care Organizations (MCOs). Success depends on demonstrating tangible value and operational resilience. This guide outlines four core strategies to achieve this goal.

1. Prove Your Value with Data & ROI: Lead with evidence, not anecdotes. MCOs need partners who can document a clear Return on Investment (ROI).

  • Build internal data capabilities to track payor-relevant metrics like reductions in emergency department visits and hospital readmissions.
  • Create a “value dossier” that quantifies how your services lower high-cost care utilization and improve health outcomes for high-risk populations.

2. Adapt to New Payment Models and Service Delivery Structures: Move beyond fee-for-service by aligning your services and contracts with models that reward outcomes.

  • Proactively monitor state Medicaid contracts and waiver renewals for opportunities related to Value-Based Payment (VBP), In-Lieu-of-Services (ILOS), and Value-Added Benefits.
  • Be prepared to negotiate shared-risk or shared-savings contracts, positioning your organization as a partner invested in the MCO’s financial and quality goal

3. Master Partnership Mechanics: Operational excellence in billing and administration is a competitive advantage in a cost-sensitive environment.

  • Invest in specialized billing expertise to navigate complex MCO payment systems, including per-member-per-month (PMPM) arrangements and proper use of ICD-10 Z-codes for social needs.
  • Streamline internal documentation and proactively negotiate clear payment terms to ensure financial sustainability.

4. Forge Strategic Alliances for Scale: Increase your negotiating power and service capacity by collaborating with peer organizations.

  • Form or join collaborative networks, such as Community Care Hubs, to aggregate data, standardize practices, and offer a broader regional service footprint.
  • Present a unified front to MCOs and integrate with existing state-mandated structures to become a scalable solution for population health management.

By implementing these strategies, SSOs and CBOs can secure their vital role, ensuring that community-based supports remain integral to a sustainable, high-quality Medicaid system.

Introduction: Partnership During a Shifting Policy Landscape in Medicaid

The operational landscape for state Medicaid agencies and Medicaid Managed Care Organizations (MCOs) is undergoing profound transformation, marked by significant federal policy shifts and financial restructuring that demand organizational agility for social service organizations (SSOs) and community-based organizations (CBOs). Recent federal actions, including cuts to Medicaid funding, new Medicaid eligibility requirements (e.g., work requirements), and revocation and expiration of pandemic-era funding mechanisms, are exerting substantial fiscal pressure on states. These changes challenge states to sustain high-quality healthcare access while demanding greater budgetary efficiency from the Medicaid program.

As a result, SSOs and CBOs are exploring  how to solidify their role as, or become, indispensable partners to Medicaid MCOs and state Medicaid agencies amidst these budget constraints. There is a unique and durable opportunity for SSOs and CBOs to demonstrate their value not merely through service provision, but through documented cost-effectiveness and efficiency. MCOs and state agencies are increasingly focused on leveraging existing resources to achieve better outcomes, particularly by managing risk, improving efficiency, and stabilizing the health of people covered by Medicaid. The core competencies of SSOs and CBOs in delivering comprehensive coordination and community supports are strategic assets that align perfectly with payor goals of cost containment and quality metric performance. By framing their work around achieving measurable results that translate into financial savings and improve health outcomes, SSOs and CBOs can secure their role as critical partners in sustaining Medicaid programs.

Who We Are: Lutheran Services in America

It is within this context that Lutheran Services in America (LSA) has developed this guide for SSOs and CBOs both within the LSA member network and beyond. As one of the nation’s largest national networks of health and human service providers with a mission to cultivate caring communities that advance health and opportunity for all, LSA’s work is rooted in a century-long faith tradition of service in, with, for, and to the community. Through its nationwide network of more than 300 independent faith-based health and human service providers, LSA works in 1,400 communities, Washington, DC and Puerto Rico, and reaches six million people annually: 1 in 50 people in America, in 1,400 communities, with more than 250,000 dedicated employees.1

LSA utilizes its national member network to identify emerging policy and practice trends, make targeted investments to test innovative approaches, assess opportunities for scaling successful initiatives, evaluate outcomes, and share best practices with stakeholders across the health and human services sector. This guide is part of a multi-year initiative to reshape and foster alignment between health and social care systems to strengthen families.

The purpose of this guide is to:

  1. Outline the current federal and state Medicaid policy landscape and its impact on potential and existing partnerships with SSOs and CBOs,
  2. Describe the strategic opportunities that SSOs and CBOs have to add value to state Medicaid agencies and MCO partnerships,
  3. Outline core strategies for fostering and sustaining partnerships with Medicaid state agencies and/or Medicaid MCOs using examples from LSA member organizations,
  4. Offer concrete recommendations for LSA members and other SSOs/CBOs to expand and strengthen their partnerships through service delivery.

The Evolving Medicaid Landscape

Federal and State Pressures and Opportunities

Statutory Changes to Medicaid and Other Health-Related Provisions

H.R. 1, the One Big Beautiful Bill Act, became public law on July 4, 2025.2 The law includes several health-related provisions, particularly related to Medicaid, that reshape how Medicaid operates and provides services. These changes will impact state Medicaid programs primarily through eligibility changes, the restructuring of some program finance mechanisms, and mandates aimed at reducing federal expenditures.

Work Requirements

States must establish Medicaid community engagement requirements (also known as “work requirements”) for adults ages 19-64 enrolled through the Medicaid expansion (or “expansion like”) eligibility category starting no later than January 1, 2027. The law excludes some expansion adults such as those who are pregnant or medically frail. Individuals subject to the requirement must demonstrate community engagement—defined as meeting conditions like working, participating in a work program, or performing community service for no fewer than 80 hours per month—to maintain their Medicaid enrollment.3

Cost Sharing

The law also mandates that, beginning October 1, 2028, states must impose cost-sharing greater than $0 (but not to exceed $35) for certain services furnished to Medicaid expansion enrollees whose family income exceeds the federal poverty level. The law prohibits states from imposing cost sharing on primary care, mental healthcare services, substance use disorder services, or services furnished by Federally qualified health centers, certified community behavioral health clinics, or rural health clinics.

Medicaid Financing

The law tightens Medicaid financing flexibility through state-directed payments (SDPs) and provider taxes. SDPs are mandated payments MCOs must make for certain services or to certain providers in accordance with the state’s managed care contract.4 The law caps the total payment rate for a service made under an SDP to 100% of the published Medicare payment rate for states that have expanded Medicaid, and 110% for non-expansion states.

The law also imposes new constraints on states’ use of provider taxes, a long-standing financing mechanism used by nearly all states to help fund their share of Medicaid spending. These taxes, paid by healthcare providers like hospitals and nursing homes, are typically used to secure additional federal matching funds and support base payment rates to those same providers.5 By capping and gradually phasing out these arrangements, the law significantly reduces a key source of flexible state revenue for Medicaid.

The overall effect of the Medicaid policy changes, including but not limited to those discussed here, is projected to result in a $900 billion reduction in federal Medicaid spending over 10 years.6 These budgetary shortfalls may result in states reducing provider reimbursement rates, limiting eligibility, or cutting optional services.7

Despite these broad pressures, the new law also introduces specific opportunities for federal investment in states and some programmatic expansion.

Rural Health Transformation Program

The law establishes the Rural Health Transformation Program (RHTP), providing $50 billion in appropriations over fiscal years 2026 through 2030, to be allotted to states with approved plans to strengthen rural communities by improving healthcare access and quality. Only states may apply for and receive funding from the RHTP, but states may include subaward and partnership opportunities for other organizations, including SSOs/CBOs, in their plans.8 At the end of 2025, CMS awarded RHTP funding to all 50 states.9 Most states have posted the contents of their applications or provided application summaries so organizations can review them and identify potential opportunities for partnership.10

Home and Community Based Services

Furthermore, the law includes provisions for expanding Home and Community-Based Services (HCBS) coverage by allowing the Secretary to approve waivers, starting July 1, 2028, that offer HCBS to individuals who do not require an institutional level-of-care determination, provided the state meets strict requirements including cost neutrality. These specific funding streams and authorized flexibilities create “Federal-Level Opportunities” for organizations that can demonstrate value, improve outcomes, and align their work with the mandated goals of efficiency and chronic disease management.

In addition to recently passed legislation, the new administration is also shaping the current policy environment via regulatory updates and broader agency initiatives.

Make America Healthy Again

The growing Make America Healthy Again (MAHA) movement, led by the MAHA Commission within the Department of Health and Human Services (HHS), is working to reform America’s food, health, and scientific systems to identify the root causes of chronic disease and improve the health of Americans.11 The Commission’s recent release, the Make Our Children Healthy Again Strategy,12 presents a plan with over 120 initiatives to address childhood chronic disease.13 The Strategy highlights that 60% of Supplemental Nutrition Assistance Program (SNAP) participants received Medicaid in 2019, emphasizing that nutritional deficits funded through public programs like SNAP directly drive disease-related costs in the Medicaid system. Organizations that can help reduce the burden of poor nutrition and other negative psychosocial factors on childhood health through care coordination will be valuable partners moving forward. Accordingly, even with CMS’s rescission of its Health Related Social Needs (HRSN) guidance,14 there is still an appetite to address factors like food and nutrition as well as psychosocial issues like mental health/substance use disorder.

THE STRATEGIC OPPORTUNITY FOR SSOs and CBOs

In this fiscally constrained and shifting policy environment, state Medicaid agencies and Medicaid MCOs need partners that can ensure maximum efficiency. Consequently, stakeholders across the healthcare industry will be seeking partnerships that:

  1. Improve preventive care and management of chronic disease
  2. Reduce drivers of high-cost diseases
  3. Prevent outcomes that are costly to the healthcare system and consumers
  4. Improve Healthcare Effectiveness Data and Information Set (HEDIS) and other quality metrics that affect payment and ratings (e.g., health outcomes and adherence)

SSOs and CBOs, with their deep community roots and expertise in providing services that stabilize families and individuals, are uniquely positioned to meet this demand. The provision of social services by SSOs and CBOs directly supports these financial and contractual goals by improving health outcomes. The strategic opportunity lies in demonstrating that SSO services are not merely beneficial, but integral to the financial sustainability of the Medicaid system and aligned with the broader healthcare policy environment. This requires SSOs to frame their work and collect data that proves they are achieving the payors’ priorities.

Core Strategies for Building and Sustaining Partnerships

This section details the critical strategies for SSOs/CBOs to navigate the fiscally constrained environment outlined above, positioning themselves as indispensable partners to state Medicaid agencies and MCOs. The four core strategies focus on proving value, adopting advanced payment models, mastering operational mechanics, and maximizing organizational scale.

Strategy 1
Strategy 2
Strategy 3
Strategy 4

Role of SSO/CBO Leadership

Faced with fiscal instability in Medicaid, a changing policy landscape, and the shift toward outcome-based contracts, SSOs and CBOs must take steps to strengthen their professional position and prove their indispensable value to current and potential state Medicaid agency and MCO partners. The strategies outlined in this guide require more than just programmatic adjustments; they demand shifts in organizational leadership and culture. For SSO and CBO executives and board members, the path forward involves making deliberate, high-level decisions that embed value, efficiency, and partnership into the very fabric of their organizations. The following recommendations provide a leadership blueprint for this essential transformation.

  1. Champion a Data-Driven Culture from the Top Down: The transition from reporting activities to demonstrating outcomes must be a leadership-driven priority. This goes beyond hiring a data analyst; it requires SSOs and CBOs to actively build an organizational culture in which data dictates strategy. Leaders should allocate funding not just for data collection tools, but for the staff who can translate that data into compelling value stories for payors. They should also mandate that board meetings and strategic planning sessions review outcome metrics and ROI, not just service volume. The organizational decision by LSS WI to pull back from ineffective programs and refocus resources proves that outcomes data drives the strategic investment of the most successful SSOs and CBOs.54 By publicly tying an organization’s mission to its measurable impact, leaders signal to their teams, potential MCO partners, and state Medicaid agencies that their organizations are serious, performance-oriented enterprises.
  2. Incentivize and Prepare Your Team for New Models of Service Delivery: Accepting new models and or services that support SSO/CBO service delivery like VBP, ILOS, and VAB, is as much a cultural shift as a financial one. Leadership must proactively prepare the entire organization for this transition. This means critically evaluating current staff competencies and investing in training for contract negotiation and management.

Despite the shifting policy landscape, states are still pursuing care coordination models through SPAs; for example, Oklahoma,55 Vermont,56 and New Jersey57 have SPAs (approved during the current administration) that expand coverage for community health workers (CHWs) or targeted coordination. Additionally, as Medicaid waivers from the previous administration expire, states may want to continue offering care coordination and other enhanced services through a different mechanism. They will be in search of partners, like SSOs and CBOs to do so.

SSOs and CBOs should leverage their expertise in developing coordinated services that address needs like transportation, nutrition, and other psychosocial factors impacting health. SSO/CBO leaders may consider restructuring organizational compensation models to mirror the value-based outcomes bonuses their MCO partners receive, similarly tying internal bonuses to outcome achievements. This can align SSO/CBO staff’s success directly with MCO goals. Furthermore, SSO and CBO leaders could consider creating a dedicated “innovation fund” or reserve to help pilot new value-based services and help weather the cash-flow uncertainties that can come with shared-risk contracts, demonstrating a long-term commitment to this sustainable funding path.

  1. Treat Operational Infrastructure as a Core Strategic Asset: In a landscape of thin margins, operational excellence is a competitive advantage. Leaders must stop viewing functions like billing, IT, and compliance as mere administrative costs and start treating them as critical strategic investments. This means approving budgets for modern IT systems that can integrate with MCO and state platforms and hiring a Chief Financial or Operating Officer with specific expertise in Medicaid managed care complexities. Such systems not only serve to strengthen the case for partnerships with managed care and state partners, but also help ensure that patients are receiving the services they need and are eligible for. Further, SSO and CBO leaders should be informed about state budgeting strategies being employed to mitigate budget volatility.58 Understanding that states are prioritizing investments in behavioral health and maternal health, where Medicaid has an outsized role in service delivery, offers clear focus on areas for new SSO/CBO proposals for potential partners. AFS, for instance, plans to expand its coordination services to the maternal health field in cooperation with Wisconsin’s new Maternal Health Strategic Plan.59
  2. Become the Convener and Architect of Strategic Alliances: Forging alliances is not a passive activity; it requires direct and sustained involvement from leadership. A leader’s role is to be the primary convener and relationship-builder. Personally initiate conversations with peer leaders to build trust and explore collaboration. Consider dedicating specific staff time to alliance management and be willing to make strategic compromises—such as standardizing data collection or service protocols—for the greater good of the collective. These efforts may not always lead to formal partnerships like CCHs or ACOs, but can, at a minimum, provide opportunities for organizations to share best practices. LSA’s own Results Innovation Lab acts as a central convener, uniting over 50 member organizations in a collaborative learning environment that supports leaders in cultivating strong stakeholder relationships, exchanging best practices, and forming strategic alliances. By championing these partnerships, leaders can transform their organizations from a lone actor into an indispensable, scalable node in the network of service providers.
  3. Embed Foresight and Agility into Strategic Planning: The policy landscape will continue to shift, and accordingly, leadership’s role is to build an organization that is resilient and responsive. Formalize a process for environmental scanning by assigning a “Policy Lead” on the leadership team, subscribing to key state and federal policy updates, and holding quarterly “Horizon Scanning” meetings to assess the current and future policy landscape. Use these insights not just for reactive adaptation, but for proactive strategic planning. Direct development teams to pivot program proposals toward emerging funding streams (like the $50 billion Rural Health Transformation Program)60 and align organizational messaging with current administrative priorities. Use strategic alliances with other SSOs/CBOs (like CCHs, ACOs, and other backbone structures described above) to educate state policymakers about critical gaps in Medicaid and to share how SSOs/CBOs can fill them. Given the current administration, SSO and CBO leaders may consider framing their stabilization and preventive care services within the policy context of reducing overmedicalization and combating the chronic disease crisis, which is a key focus of the administration.61 Nevertheless, the policy environment described in this guide is only a snapshot. It is incumbent upon leadership to maintain awareness of the policy landscape so that, as priorities change, SSOs and CBOs can continue to offer their partnership to state Medicaid agencies and Medicaid MCOs in a way that is relevant and attractive through political and fiscal cycles.

Conclusion: The Path Forward

The profound transformations in the Medicaid landscape—marked by federal funding constraints, new eligibility mandates like work requirements, and a resolute focus on fiscal efficiency—are not a temporary disruption but the new operational reality. For SSOs and CBOs, this environment demands a fundamental shift in strategy. The path forward requires moving beyond the role of a well-intentioned service provider to becoming an indispensable, strategic partner whose value is quantified and directly aligned with the financial and quality goals of CMS, state Medicaid agencies and MCOs.

Success in this new era will be defined by an organization’s ability to speak the language of value and outcomes. As this guide has detailed, this means leading with robust data that demonstrates a clear ROI, proactively adapting service delivery and payment models to shared-risk arrangements, mastering the operational mechanics of billing and contracting, and forging strategic alliances to achieve the scale necessary for population health management. The case studies from the LSA network provide a powerful blueprint, proving that organizations that can document reductions in high-cost care, improve health outcomes using quality metrics, and operate with financial and administrative resilience will not just survive but thrive.

Ultimately, the core mission of SSOs and CBOs—to strengthen families and individuals through community-based supports—is more critical than ever. By framing this work within the context of cost containment and quality performance, SSOs can secure their vital role in the healthcare ecosystem. Lutheran Services in America members, with their deep community roots, national reach, and commitment to performance-driven resource allocation, are uniquely positioned to be these essential partners. By embracing the strategies outlined in this guide, SSOs can help ensure that even in a time of fiscal constraint, the Medicaid program continues to deliver on its promise of high-quality, compassionate care for those who need it most.

Acknowledgements

Deep gratitude and thanks to Katie Horton, JD, RN, MPH, Greg Dwyer, MPH and Aaron Karacuschansky, MPH at the Department of Health Policy and Management, Milken Institute School of Public Health at George Washington University for their research and contributions to make this brief possible.

Resources

The Partnership to Align Social Care provides a billing/coding and contracting playbook for state Medicaid agencies.

The Center for Excellence to Align Health and Social Care (COE) is an online resource hub that offers technical assistance, training, toolkits, national learning communities, and maps of Community Care hubs across the U.S.

The Pathways Community HUB Institute offers a community-based, outcome based, health & social services care coordination model.

The Administration for Community Living is a U.S. federal agency (part of HHS) that formally funds and supports CCHs.

COE’s CCH Toolkit provides comprehensive readiness assessments, resources for developing a hub, contracting guides, self-assessment tools, and other templates for network development.

The Aging and Disability Business Institute’s CCH Governance Toolkit provides templates and guides for board governance, committee charters, and bylaws

California’s Department of Health Care Services’ MCP-Hub Toolkit provides modules on functions of a hub, contracting relationships, data & quality reporting, and oversight requirements. These are useful tools for hubs engaging with managed care and compliance functions in California and more broadly.

Partnership to Align Social Care’s Financial Guide for CCHs provides tools to support CCHs and communities contemplating CCHs to understand the financial components of operating a hub.

Rippel’s Vital Conditions and Well-Being Portfolio is a tool to create a balanced and impactful set of practices to transform well-being.

Omaha Pathways Community HUB is a network of Care Coordination Agencies and Community Health Workers focused on removing barriers to optimal health.

Common Spirit’s Connected Community Network & Bank Model is a collective financing mechanism for community-led, -owned networks

CommonSpirit’s Medicare Health Equity Services Pilot is a multi-market demonstration testing new Medicare billing codes for CHW and patient navigators

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