CMS Ends Federal Funding for Medicaid Health Programs

The Centers for Medicare & Medicaid Services (CMS) announced it will end federal funding for designated state health programs (DSHP) and designated state investment programs (DSIP), which have been used by states to fund non-medical services aimed at improving health outcomes for Medicaid enrollees. This decision marks a shift from previous administration policies that encouraged funding for non-medical services like housing and nutrition. CMS stated that these programs have seen significant growth, from $886 million in 2019 to nearly $2.7 billion in 2023, but have raised oversight concerns regarding their necessity and connection to Medicaid services. The agency argues that DSHPs and DSIPs essentially allow states to access federal funds for priorities outside of direct Medicaid commitments. The change is expected to affect various state initiatives and could lead to funding cuts for social services reliant on these programs. The announcement aligns with broader budget discussions in Congress regarding cuts to healthcare spending.