Community health workers (also known as promotores and community health representatives) fill an important role in the health care system by linking individuals to public health and medical resources that support their health and well-being. Community health workers are unique in that they are trusted members of the community and are able to serve as a liaison between the community and local health/social services. Research continues to show that community health workers can help improve chronic disease control, mental health, promote health behaviors, and reduce hospitalizations.

The Milbank Memorial Fund recently released a toolkit to provide a framework for state Medicaid leaders and community health workers to use when developing State Plan Amendments (SPAs), as well as guidance documents to establish coverage and payment for community health worker services. The toolkit includes SPA model text for community health worker services coverage that states can use to aid during the drafting process. The toolkit also includes principles for community health worker reimbursement rates, noting the difference between Medicaid and Medicare payments.

Milbank’s new toolkit builds on the National Academy for State Health Policy (NASHP)’s review of the process of community health worker-related SPA development. The toolkit was also written collaboratively with community health workers. Although community health workers have existed for decades, most funding has come from grants. At the beginning of the year, Medicare introduced the first billing code for community health worker services. Despite a handful of Medicaid programs covering these services for many years, the addition of Medicare coverage has provided new momentum for more states to follow suit in Medicaid with over half of state Medicaid programs now covering these services. Reimbursement varies by state as some states include reimbursement for community health worker services under Medicaid managed care organization (MCO) contracts, or SPAs.

While this state progress is encouraging, potential cuts to federal Medicaid in Congress could undermine progress on state community health worker services. For example, if Medicaid were to become block granted or capped, states would not be able to rely on a strong and consistent federal partner. Once the federal contribution is reached, states would need to finance 100% of benefits and services for the remainder of the fiscal year, or worse, decide where to make cuts with limited state dollars. State budgets would be strained by this extra cost and require the state to roll back eligibility or services for Medicaid and/or cut other areas of state spending such as K-12 education. Community health workers are an effective way to help reduce health care spending in the long-term but states could be forced to put them on the chopping block due to federal funding cuts as they are covered at state option. Randomized controlled trials have shown that community health workers working with people enrolled in Medicaid save $2.50 for every dollar invested and reduce inpatient stay changes by 36 percent. In a more structured environment like health systems, a team of six community health workers can serve over 300 patients, making them an effective workforce investment for employers as well. Though these services may be the first to be discontinued if Medicaid faces major federal cuts, this is not necessarily reflective of their value, even from a dollars-and-cents perspective. Pennywise, but pound foolish, as they say.

Community health workers are vital in linking individuals to health resources and building trust between communities and the health care system overall. Milbank’s new toolkit is a helpful resource that Medicaid leaders and community health workers can use as a framework for developing SPAs that include reimbursement rates for community health worker services. The increasing number of states covering community health worker services is promising progress in recognition of their value and in the development of a sustainable funding source for services. But major changes to Medicaid’s financing structure jeopardizes states’ ability to reimburse community health workers and other optional services.