Community health workers can reduce costs, but face funding hurdles

The Charleston County Public Library offers more than just books. With more than 19 locations along South Carolina’s Atlantic Ocean coastline, the facilities have become a hub of resources for area residents.

There are sewing machines, cooking classes and free birth control, made available through partnerships with local organizations. A branch on Edisto Island, a 1,800-person community on the southern edge of the county, hosts health fairs to make up for a lack of infrastructure.

“A lot of people come to the library. It’s a trusted place in the community, sort of a neutral ground. And I think being that trusted place in the community, we can use that as leverage to reach people with their healthcare needs,” said Ren Ruggiero, who was hired by the library through grant funding to serve the county’s rural regions.

Ruggiero is a community health worker: someone who may be tapped to fill health literacy gaps, create public health projects or help patients navigate available services. She launched a telehealth program connecting rural residents with clinicians at the Medical University of South Carolina in Charleston and supplies the library’s three rural branches with free take-home kits to test for sexually transmitted infections. She is also developing seminars on how to manage diabetes.

The grant covering Ruggiero’s salary and programming costs is running dry. The library will pay on an interim basis, but leadership is trying to find another long-term funding source. This is a common problem among community health workers, Ruggiero said. One-time grants often pay for the work, making it hard to sustain in the long term. Though community health workers have been lauded by insurers, providers and policy experts as a way to close disparity gaps, reduce healthcare costs and improve outcomes among vulnerable patients, their deployment throughout the United States has been limited and inconsistent.

With Medicaid redeterminations restarting for the first time in two-and-a-half years, many stakeholders believe community health workers will be critical in helping the estimated 15 million individuals who will no longer qualify for public health plans sign up for other coverage. A growing number of states are using their Medicaid programs to more consistently fund the workforce. But the workers’ nebulous role in the healthcare system can present reimbursement challenges, leaving some states hesitant to directly pay for their services.

Support through Medicaid funding

Congress is focused on growing the community health workforce, with the American Rescue Plan allocating $225 million in September 2022 toward state Medicaid agencies, community groups, providers or other organizations to train more than 13,000 people nationwide. This year, the Consolidated Appropriations Act tasked the Health and Human Services Secretary with distributing $50 million annually in grants, contracts and cooperative agreements over the next four years to public and private organizations focused on building the workforce.

Historically, local organizations and regional governments have relied on grant funding to pay for community health workers. The Affordable Care Act opened the door for the use of public health funds to provide long-term support for the workers’ services by enabling states to establish “health homes,” or integrated care teams charged with managing Medicaid patients’ chronic conditions. The 2014 preventive care regulation allowing state Medicaid programs to pay for services provided by non-licensed caregivers—so long as those services are recommended by a licensed clinician—widened the options for healthcare organizations, including insurance companies, to recruit workers from within high-need communities.

Ballad Health, a Johnson City, Tennessee-based nonprofit provider, has been using grant money, a pilot program with the Center for Medicare and Medicaid Innovation and its own funds to pay for community health workers since 2018.

Many of the workers, who are tasked with helping Medicaid and uninsured patients navigate healthcare services, don’t have four-year degrees, said Paula Masters, vice president of population health at Ballad.

“We’re not looking for a type of education. We’re looking for a type of natural helper: someone who is from those communities, has those lived experiences, has that resourcefulness,” she said.

Ballad is now in talks with the state’s Medicaid agency and managed care organizations contracted to administer Tennessee’s public health program to negotiate sharing payment for the initiatives.

If it’s successful, Tennessee could join the 29 states offering reimbursement for community health workers through their Medicaid programs, either under the ACA’s health homes regulation; the preventive care regulation; or Section 1115 waivers. Those waivers allow states to establish pilot programs authorizing fee-for-service reimbursement to providers for specific community health worker services or designating their care as a “quality improvement” activity, for which Medicaid insurers can spend their capitated payments: the flat monthly rate the state pays them to manage care.

Some of these states go a step further, requiring managed care organizations to provide community health worker services in order to win competitive Medicaid bids. The cost of the workers’ salary and programming is factored into the capitated payment.

That’s the case in Michigan, where Meridian Michigan employed community health workers before the state mandated in 2015 that managed care companies offer community health workers. The state requires insurers to provide one such individual for every 5,000 members. The Centene subsidiary has since grown its in-house staff from three to 45.

Michigan requires managed care companies to train community health workers in local privacy, safety and other laws. The company’s only necessary qualifications for joining Meridian’s in-house team are for individuals to complete a high school education, finish Centene’s 13-hour certification course and feel passionate about gathering information about Medicaid patients’ medical and social needs, said Dr. Kay Judge, chief medical officer at Meridian Michigan.

“We find that when they’re employed by the health plan, we have end-to-end visibility into what our members’ needs are,” Judge said.

The managed care organization also contracts with community organizations to supply additional workers, paying a monthly fee for every Medicaid patient served.

Working with local groups helps the company connect with the community, but it can present data challenges, Judge said.

“Some community-based organizations may not even be collating their information on a computer,” she said.

The insurer’s in-house and external community health worker partners in 2022 connected more than 2,100 Medicaid patients with necessary resources, Judge said. Patients’ top identified need was housing; Meridian’s community health workers were able to secure affordable residences for 325 members, or nearly half of those who requested the service.

Some state Medicaid programs pay for community health workers’ services on a fee-for-service basis, in addition to through capitated payments. Last year, California’s Medi-Cal program authorized payment to providers that incorporated community health workers into their care team, so long as licensed clinicians supervised and recommended the workers’ services to patients. At least 12 other state Medicaid programs have followed the approach of authorizing public funds for payment of community health workers for a specific set of services, separate from Section 1115 waivers, according to a Kaiser Family Foundation report published this year.

In fee-for-service Medi-Cal, providers contract with community health workers, submit claims to the state on their behalf and are ultimately responsible for paying them. Under its managed care contracts, the state pays insurers a capitated rate, and insurers are then responsible for contracting with providers that employ the workers. Contracts between payers and providers vary, and there is no specific rate that community health workers must be paid, according to a state Department of Health Care Services spokesperson.

Supporting community health workers is intended to bridge healthcare disparities, build trust among underserved communities and deepen capacity in areas suffering from provider shortages, the spokesperson wrote in an email.

“Community health workers are critical to closing quality and health equity gaps,” the spokesperson wrote. The department said other states should use their Medicaid programs to fund community health workers.

In states that have not authorized community health workers as a covered entity under Medicaid, like South Carolina and Tennessee, managed care organizations can still pay for the workforce with non-Medicaid funding.

Ongoing hurdles

Community health workers’ somewhat murky role in the healthcare system can present logistical reimbursement challenges and raise concerns among state officials about spending.

Fee-for-service payment structures, like California’s, may shoehorn the activities the workers can provide into fitting within existing clinical systems, said Sweta Haldar, co-author of the Kaiser Family Foundation report and policy analyst for the organization’s racial equity and health policy program and the program on Medicaid and the uninsured.

A general lack of reimbursement codes exacerbates the issue. In 2016, the Centers for Medicare and Medicaid Services introduced “Z codes” allowing clinicians to add a patient’s social determinants of health needs as a diagnosis to their medical chart, but the codes do not authorize payment for treatment of these non-medical services.

“The fee-for-service model for billing doesn’t really work for the kinds of services community health workers provide,” Haldar said. “They have a really expansive role, and they’re very grassroots-oriented, and the medical model of reimbursement [makes it] difficult to capture the amount of value they provide through that discrete, fee-for-service billing model.”

More broadly, some state Medicaid officials may feel paying for non-licensed clinical services represents an extra line item that underfunded, understaffed programs cannot afford, said Kate McEvoy, executive director of the National Association of Medicaid Directors, a trade group for state Medicaid officials. It could also spark pushback from providers, who argue that Medicaid payment should be prioritized for licensed clinicians, rather than community health workers, she said.

The trend “is moving away from the historical norm of licensed clinicians being really the center point of care that’s received,” McEvoy said. “Community health workers typically aren’t licensed. They’re people with a lot of lived experience. That’s something that is over time being more and more embraced by traditional healthcare practices, but it is a learning curve.”

Some argue that if public funds are going to be spent on the workers, standardization in their training and the services they provide is necessary. States are increasingly developing certification programs for community health workers, or delegating training responsibilities to managed care companies, McEvoy said.

“Community health workers want to be recognized as a distinct professional path,” McEvoy said. “They want to have that social valuation of the work they do. They want to have the support of certification and also ongoing training to make sure that they feel equipped to perform their jobs.”

Requiring a standard certification could present hurdles for would-be community health workers, however, particularly if they must pay out of pocket for the credential.

Yuri Bejarano, who immigrated to the United States as a teen, is part of the care management team at Baylor Scott and White Health in Waco, Texas. She provides translation and navigation services, teaching people to advocate for themselves within the healthcare system, she said.

Although Texas’ Medicaid program doesn’t cover her services, the state does require certification to become a community health worker. Six years ago, Bejarano decided to pursue the role. But she couldn’t afford the fees related to the 160-hour course.

“I was just very poor at the time,” she said. A social worker she called for advice agreed to front the costs for the training program, helping launch her career.

“When I educate a patient, I feel like I’m not only educating them, but I’m educating their descendants as well,” Bejarano said. “Because if the patient follows a healthy lifestyle and is taking care of their mental and physical well-being, I feel that sets an example for their children and grandchildren. In a way, you are changing generations to come.”