Medicaid and Permanent Supportive Housing for Chronically Homeless Individuals: Emerging Practices From the Field. 2.4. Medicaid-Covered Health Services


As described in Chapter 1, Medicaid is implemented through partnerships between states and the Federal Government. Each state must develop a Medicaid state plan that describes the health care benefits its program will provide. The plan and plan amendments must be approved by the HHS Centers for Medicare and Medicaid Services (CMS).

We include a discussion of covered services in this chapter on eligibility because it is easy to confuse eligibility for Medicaid per se with eligibility for the types of services most useful and important to people who are or have been chronically homeless. These include services and supports that can be delivered in a person's home or in other settings outside of an office, clinic, or treatment program, as well as case management and care coordination services. Not all Medicaid beneficiaries qualify to receive these types of services. Later chapters, which focus specifically on these types of services, describe the eligibility criteria for receiving them, which are established in terms of medical necessity.

Federal law and CMS regulations prescribe a set of core benefits that each state must include in its Medicaid state plan.15 States may decide to cover additional optional services and may limit eligibility for additional services to specific groups of people.16 Medicaid state plan provisions specify many program details, including provider qualifications, definitions of covered services, target populations, criteria of medical necessity for each specific service, and payment mechanisms for covered benefits. States must obtain CMS approval for optional services and other program details through state plan amendments.

While the expanded eligibility discussed above (Section 2.2.1) is a hugely important change affecting many poor people, including those experiencing homelessness, it is important to recognize that the types of care available through Medicaid may differ depending on certain characteristics of the beneficiaries. Both the basis for enrollment (categorical or income) and the health conditions of the beneficiary will affect eligibility for specific Medicaid-covered services.

In the post-2014 environment we can distinguish two general configurations of covered services, which are described below:

  • Medicaid State Plan: This is the array of services that anyone qualifying for Medicaid on a categorical basis would be able to receive. Federal law and CMS regulations stipulate the benefits a state must provide (mandatory benefits) and also allow states to cover a number of optional benefits (see footnote 16 and footnote 17).

  • Alternative Benefit Plans: This is the basic array of covered services that states must provide to the expansion population (those who qualify based on income alone). These plans may be different than the Medicaid state plan, with states defining benchmark coverage, but plans must include the essential health benefits specified by the Affordable Care Act.17 In 2014, many states have established Alternative Benefit Plans based on their Medicaid state plan, offering the same services that are offered in the state including long-term (nursing home) care.

The Affordable Care Act stipulates that the "essential health benefits" offered by Alternative Benefit Plans must include treatment services for mental health and substance use disorders, as well as rehabilitation and "habilitative" services and devices.18 Behavioral health treatment cannot be more limited than treatment for physical conditions. Because of these "parity" requirements, an Alternative Benefit Plan might offer better coverage for treatment of substance use disorders than the state's Medicaid state plan but less coverage for some of the types of mental health services covered through other current mechanisms, such as optional rehabilitative services option or waiver programs.19

While federal rules describe the minimum set of benefits that must be provided through Alternative Benefit Plans, states also have some flexibility to cover a more robust package of benefits tailored to the particular needs of population subgroups.20 A package of tailored benefits could potentially be designed to meet the needs of people with histories of chronic conditions that may contribute to chronic homelessness. States will determine the design of benefit plans available to people who become eligible for Medicaid in 2014, and states will decide whether Medicaid will cover many of the services that are most often delivered in PSH models. States will also decide on the provider qualifications required for Medicaid reimbursement. As shown in Exhibit 2.2, the five case study sites that have gone forward with expansion have established Alternative Benefit Plans that are equal to the Medicaid state plan with no exclusions. Some states that are going forward with expansion are adopting more limited Alternative Benefit Plans.

EXHIBIT 2.2. Alternative Benefit Plans of the Six Case Study Sites

State Alternative Benefit Plan
California Medicaid state plan
Connecticut Medicaid state plan
District of Columbia   Medicaid state plan
Illinois Medicaid state plan
Louisiana Not going forward at this time  
Minnesota Medicaid state plan

2.4.1. Who Can Get What?

Medicaid is fundamentally a benefit program that provides health care coverage in much the same way that private health insurance programs do. Some services may be available to everyone, such as physical exams, but most services will only be provided if the beneficiary's health condition justifies them. Thus, only people with advanced heart disease will get heart surgery and only pregnant women will get prenatal care.

Most chronically homeless people and those living in PSH who reside in states that implemented expansion became newly eligible for Medicaid in 2014 on the basis of income. Once enrolled in Medicaid, they will qualify for their state's Alternative Benefit Plan. Most states have chosen to enroll the expansion population in Alternative Benefit Plans that are based on the state's approved Medicaid state plan.

Several subsequent chapters describe in detail the services that are particularly important for people experiencing chronic homelessness or living in PSH. Chapter 5 discusses mental/behavioral health services, and Chapter 7 examines emerging models of care coordination. In addition to describing our findings with respect to the services themselves, each of these chapters also discusses the medical necessity criteria that an individual would have to meet to be eligible to receive the services.

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