Medicaid is the United States’ public health insurance program serving individuals with low income. Medicaid operates as a state-federal partnership, with each state establishing its own Medicaid program within broad federal parameters. As such, payment for FIM interventions within Medicaid varies significantly from state to state.
Is there a requirement?
Federal law outlines two main types of Medicaid benefits: mandatory services that every state must cover and optional benefits that states can choose to include. Each state spells out the details of these benefits in its Medicaid State Plan and makes sure people can access them either directly or through Medicaid managed care plans.
As of December 2025, FIM services are not listed as required or optional Medicaid benefits in any state. However, a few states include limited components, such as certain supports offered through home and community-based services (HCBS) programs. At the same time, many states have found other ways to cover or pay for some FIM-related services. These include section 1115 demonstration waivers, HCBS authorities, and “in-lieu-of services” (ILOS) arrangements under Medicaid managed care.
For people enrolled in managed care plans, these services may appear in plan materials, like an evidence of coverage document, just like any other covered benefit, even if they are technically financed through one of these alternative pathways. It’s also worth noting that states often cover only certain types of FIM services, such as medically tailored meals, rather than the full range of services described in this toolkit.
Path 1: Section 1115 Demonstration Waivers
Goal:
Section 1115 demonstration waivers allow states to request authorization from CMS to establish experimental, pilot, or demonstration programs that promote the objectives of the Medicaid program.
Period of Performance:
Demonstrations are typically approved for five years and then must be extended or renewed.
Purpose:
Demonstrations are highly flexible and have been used by states to expand Medicaid eligibility, test new service delivery systems, and establish payment for nontraditional services, including nutrition supports.
Allowance:
Funds may:
1. Flow from the Medicaid program to a managed care plan to administer the FIM benefit pursuant to a fee schedule or other payment model.
2. Paid directly to FIM service providers enrolled in the Medicaid program on a fee-for-service basis.
Availability:
13 states have CMS approval to operate 1115 demonstrations that include payment for FIM services (CA, CO, DE, HI, IL, MA, NC, NJ, NM,NY, OR, PA, WA) and 3 additional states have proposed demonstrations under consideration with CMS (DC, ME, NV), as of December 2025.
Path 2: Home and Community Based Services (HCBS) Authorities
Goal:
States also have several pathways that allow them to provide coverage of additional services to keep individuals in their homes and communities who might otherwise require—or be at risk of requiring—care in an institutional setting. States typically establish coverage for these services via section 1915(c) home and community-based services waivers or a section 1915(i) state plan amendments.
Purpose:
States may use these authorities to establish coverage of an array of services to keep participants in their homes, including nutrition supports such as home-delivered meals, though coverage may not provide a “full nutritional regimen” (i.e., coverage is limited to no more than 2 meals per day).
Allowance:
Under these authorities, funds may:
- Flow from the Medicaid program to a managed care plan to administer the FIM benefit.
- Be paid directly to FIM service providers enrolled in the Medicaid program on a fee-for-service basis.
Availability:
The vast majority of states operate at least one 1915(c) waiver. Coverage of nutrition supports varies by waiver.
Importantly, while 1115 demonstrations and HCBS authorities may both be used to require payment for FIM services, eligibility and service coverage vary significantly between states and individual programs.
To learn more about whether and how these programs operate in your state, visit your state Medicaid agency website or Medicaid.gov, which provides searchable databases of state waiver and state plan amendment materials.
Example: Massachusetts Section 1115 Demonstration Waiver
Massachusetts currently operates much of its Medicaid program under an 1115 demonstration. This demonstration establishes accountable care organizations (ACOs)—entities made up of health care providers or health care providers partnered with a plan—as a health care delivery and payment model. In addition to standard Medicaid services, these ACOs are required to provide coverage for at least one supplemental nutrition service (e.g., medically tailored meals or medically tailored food prescriptions/vouchers) and one supplemental housing service as part of the state’s Health Related Social Needs (HRSN) Services Program. This program operates on a non-risk payment model. ACOs receive a quarterly prospective lump sum payments based upon enrollment, and the state conducts an annual process to reconcile payment against actual spending on services.
Are there voluntary pathways?
States may use the pathways above to require participating plans to pay for FIM services. However, even in the absence of such requirements, health plans participating in Medicaid (i.e., Medicaid managed care plans) may voluntarily choose to offer FIM services through pathways such as “in lieu of services and settings” (ILOS) and value-added services (VAS).
Path 1: In Lieu of Services (ILOS)
Goal:
Federal regulations allow states to authorize Medicaid managed care plans to provide medically appropriate, cost-effective substitutes for traditional state plan covered services. These services are known as “in lieu of services and settings” (ILOS).
Purpose:
ILOS can serve as a substitute for services that could be accessed immediately or as a substitute for services that could be needed in the longer term (e.g., to prevent future hospitalizations).
Allowance:
To authorize these services, states must include approved ILOS in their contracts with Medicaid managed care plans. Plans then have the option to provide these services (they are not required to do so).
The costs of these services must be taken into account in the development of the capitated payment rate paid to the plan by the Medicaid agency and plans can include them in the Medical Loss Ratio (MLR) numerator. ILOS can include nutrition supports.
Availability:
At least 10 states had authorized coverage of nutrition supports or related services (e.g., nutrition education) as ILOS, as of October 2024.
Path 2: Value-Added Services (VAS)
Goal:
Federal regulations also permit Medicaid managed care plans to voluntarily offer additional services to their enrollees beyond state plan covered services or ILOS.
Purpose:
Plans may use this authority—known as “value-added services” (VAS)—to provide nutrition supports to their enrollees. These services are not taken into account when setting plan capitation rates.
Allowance:
The costs of providing these services can be counted in the plan’s MLR numerator if they qualify as “activities that improve health care quality” under federal regulation.
Plans interested in using these pathways to provide FIM services can consult their Medicaid agency to understand the processes required proposing new ILOS or VAS. Providers who would like to learn more about use of these pathways could consult materials provided on their state Medicaid agency or individual plan websites (e.g., member handbooks or managed care contracts) to identify which plans may currently be offering nutrition supports as ILOS or VAS.
Example: Michigan In Lieu of Services (ILOS)
Michigan has authorized Medicaid health plans in its Comprehensive Health Care Program to offer up to four nutrition-focused ILOS: medically tailored home delivered meals, healthy home delivered meals, healthy food packs, and produce prescriptions. Participating plans offer these services to enrollees based upon state-defined clinical and social risk factors, as well as service limitations. The costs of these ILOS are included in the state’s projected benefit costs in its Medicaid Managed Care Capitation Rate Certification.
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