Agencies providing services to PSH tenants with SMI get the funds to cover service costs from many of the same sources as are used for Groups 1 and 2. Big differences for people in Group 3 include contracts from state and local mental health agencies that are supported by federal block grants or state or local general fund dollars, and the availability of Medicaid reimbursement for additional services. Medicaid coverage of specialized mental health services may be authorized under Medicaids Rehabilitation Option, Targeted Case Management Option, HCBS, and waivers. Definitions of service nature and scope, medical necessity or service access criteria, provider qualifications, and payment mechanisms are specified in state Medicaid plans.
Many provider agencies have perforce become knowledgeable about these funding sources and skilled at braiding multiple sources of funding or establishing partnerships with organizations that receive other funding. They frequently describe frustrations at the ways the different funding sources refuse to come together to provide adequate care. Differences in eligibility criteria, covered services, staff credentials, length of services, service venues, and other factors often obstruct efforts to assemble the resources needed to provide integrated care. Other papers produced for this study (Burt, Wilkins, and Mauch, 2012; Wilkins and Burt, 2012) discuss these challenges in more detail.
In the communities visited for this study, mental health service agencies most frequently combine state or county funding for mental health services with privately-raised dollars and Medicaid reimbursement for mental health services covered under the Rehabilitation Option or a mental health or behavioral health carve-out authorized by a Medicaid waiver. For persons covered through Medicaid Managed Care, there may also be opportunities to use a portion of the capitation payment provided to Managed Care Organizations to pay for services provided in PSH.
Combining a Medicaid Waiver and Behavioral Health Carve-out in Massachusetts
Since 1996, Massachusetts has used a Medicaid 1115 waiver to extend eligibility to everyone in the state who is poor enough. This means that virtually all homeless persons are, or can easily become, Medicaid beneficiaries. Massachusetts also has a Medicaid behavioral health carve-out operated by a managed care company, contracts under which give PSH service-providers a good deal of flexibility to cover activities that meet the needs of homeless people with SMI and co-occurring substance use disorders.
In some states, Medicaid can provide funding for case managers in PSH because the case manager functions meet the definition of community supports which may be covered under Medicaids Rehabilitation Option or a waiver. However, during site visits PSH services providers said that Medicaid frequently does not cover the activities needed to maintain contact with clients and assure consideration of all their issues. These activities include outreach, engagement, participating in team meetings, and vocational or employment services. Agencies often raise money privately for these activities.
State or county mental health contract funds are often more flexible than Medicaid. They are sometimes used to pay providers to do whatever it takes to engage chronically homeless persons with SMI, stabilize them in housing, and support their recovery. This includes providing services to people with SMI while they are awaiting a determination of eligibility for Medicaid. However, state mental health funds do not always cover help for co-occurring substance use disorders. Also, state budget cutbacks in recent years have made this type of funding less available, as has happened in a couple of the communities visited.