Medicaid and Permanent Supportive Housing for Chronically Homeless Individuals: Emerging Practices From the Field. 5.5. Payment Structures and Administrative Challenges


Many issues related to payment surfaced during the case studies. These related mainly to what aspects of the supports needed by people experiencing chronic homelessness and PSH tenants the Medicaid arrangements available during the study period (2010-2012) would and would not pay for. However, providers also described issues with respect to the mechanisms for getting paid.

The issues in each of these areas were quite common across case study sites. We describe them and offer one or two examples of each, though examples could be multiplied for every site.

5.5.1. PSH Service Providers' Concerns

Providers offering Medicaid-reimbursable community-based mental health services (defined in Section 5.2, above) all note that Medicaid does not cover all, or even most, of the activities associated with delivering the services and supports that are part of effective PSH programs for people experiencing chronic homelessness.

The Front End--Engaging People and Helping Them Qualify for Medicaid

In states using Medicaid's rehabilitative services option or targeted case management services benefit to fund services for people experiencing homelessness with SMI--which include California, the District of Columbia, Minnesota, and Illinois--Medicaid will not pay for the work needed to find and engage potential clients. Medicaid does not pay for the period of engagement and assessment that must occur while working to enroll a person in Medicaid. After a person is enrolled in Medicaid, targeted case management benefits can cover some of the activities related to helping a homeless person apply for housing assistance, move into housing, and get connected to services.

As we heard in all case study sites, engaging people experiencing homelessness often takes prolonged outreach efforts, with patient, nonjudgmental relationship-building through conversations and offering practical support or help to meet immediate needs when people experiencing homelessness are not interested in mental health or substance use disorder treatment. This can take months and sometimes years. As one provider says "we start with their ouch." Assessment can happen over time and may involve different team members asking questions, such as asking a homeless person to "tell me about your life," and putting pieces of information together to make a complete picture. When trust has been developed, the person may be more willing to sign forms to provide consent to release information, allowing the provider to access county records of previous hospitalizations or other treatment history needed to establish eligibility for Medicaid-covered services and benefits. During this time service providers cannot bill for any Medicaid-covered services. HUD, SAMHSA, or local funding is often used to cover the costs of services before a person becomes a Medicaid beneficiary and is enrolled in the mental health system.

While Medicaid cannot cover outreach and engagement activities needed to help a person establish eligibility and become a beneficiary, the process of enrolling in Medicaid became a lot easier on January 1, 2014, in states going forward with Medicaid expansion on the basis of income. It may eventually be possible for agencies helping people experiencing chronic homelessness enroll in Medicaid to get reimbursed through Medicaid for the work they do with newly enrolled clients to stabilize their health and behavioral health conditions and help them find housing. For this to happen, the agency would have to be a Medicaid provider and medical necessity would have to be established for the particular client and specific services.

Limitations on Reimbursement for Some Services and Activities

For some services covered under the rehabilitative services option, payment may be available only for face-to-face interactions with the client. Generally in these situations, no payment is provided for the time providers spend searching for a client, attempting to visit when the client is not at home, or waiting for the client. In some cases, states may adjust payment rates for services that are delivered "off-site" (outside of an office or program site) in order to reflect some of the higher costs associated with these services.

For people with behavioral health disorders who have experienced chronic homelessness and those living in PSH, service providers often spend a lot of time waiting--at hospitals, in court (the agency's psychiatrist may go to commitment hearings or other legal proceedings), at a jail, or other venues. Service providers often spend a lot of time traveling to make home visits to people who are living in scattered-site PSH. Generally, Medicaid reimbursement does not cover the time providers spend waiting. Time spent transporting a client to an appointment may be covered only if the provider is using the time to help the client in other ways, for example helping to cope with anxiety or develop skills.

Depending on the state's specific definitions of covered services, activities done on the client's behalf but without the client present--usually called collateral contacts--may or may not be covered as Medicaid benefits. These include setting up medical appointments for the client, checking with health care professionals about the results of those appointments, or interacting with landlords on behalf of the client. In some cases, such collateral contacts may be covered under the rehabilitative services option if the focus of the contact is deemed to be providing advice to a family member or other service provider about how to assist the client or obtaining information that will assist the client in goals related to a treatment plan. Other types of collateral contacts, which often focus on helping the client to get or effectively use other services or benefits such as housing assistance, may be covered as case management services, but only if the state or county offers Medicaid-covered targeted case management services and contracts with the provider to deliver these services.

Medicaid plays an important part in financing services in PSH but it covers only a portion of the activities, and hence the costs, of the services that engage people who are chronically homeless, provide the support needed to link them to housing, and support them in achieving and maintaining stability and recovery. While some states are working to develop and implement definitions of Medicaid services that support recovery and housing stability for people with mental illness, service providers working in PSH say that some of the activities that are necessary for this population do not fit into the definitions of covered service that have been adopted in their states.

  • Housing-Related Activities. As part of their definitions of services covered under the rehabilitative services option within their Medicaid state plan, some states include much of the work involved with helping clients move into housing and helping them get food, clothing, household items, and other things they need, but many states have not. Also frequently left out of service definitions is ongoing communication with housing providers to negotiate access to housing and to identify and resolve problems that could lead to housing loss.

    Exceptions are: (1) the District of Columbia, where both Community Support Services and Assertive Community Treatment include these activities; and (2) Minnesota, where Medicaid targeted case management services include these activities. In California, some of these services are covered as targeted case management in its package of mental health services. Under a 1915(i) home and community-based services state plan amendment, the Louisiana Behavioral Health Partnership (the state's Medicaid managed care plan for behavioral health) covers housing-related services for clients of the Permanent Supportive Housing Program receiving care from either Assertive Community Treatment or Community Psychiatric Care and Treatment teams.

  • Finding the Client. In addition to the work of engaging clients before they become Medicaid recipients, time spent trying to find people, which can be particularly challenging if they have not yet been housed, is not billable. Travel time is not covered if the client is not at home when the service provider arrives for a home visit. People with chronic patterns of homelessness do not always remember appointments.

  • Habilitation. Medicaid rehabilitative services are for the restoration of functioning, but many people who are chronically homeless need help to learn new skills for independent living, particularly if they experienced mental illness, substance use disorders, homelessness, victimization, neglect or institutionalization as children or young adults, and never had the opportunity to develop the skills needed to maintain a household, manage a budget, and be responsible tenants. Medicaid-covered targeted case management benefits do not include direct practice to teach or improve client skills (i.e., habilitation). Louisiana's Assertive Community Treatment and Community Psychiatric Support and Treatment services are covered as optional home and community-based services under a 1915(i) state plan amendment, and these services include teaching new skills (habilitation). Going forward, Medicaid's 1915(i) home and community-based services state plan benefits may offer states a good option for covering the range of supportive services that are often needed by people who are living in PSH, because these optional benefits can include habilitative services.

  • Travel Time with the Client. Transporting clients to doctor's appointments or for housing search is not reimbursable in most case study sites. Some providers reported that they use transportation time to deliver other covered services, such as talking with clients about their service plan and how they are meeting its goals, or helping clients manage anxiety and develop coping skills in preparation for appointments, so that with appropriate documentation some of this time can be billed.

Working with the client on substance use problems directly, without relating substance use to symptoms of a mental illness, may not be reimbursable under benefits defined as mental health services. In California and Illinois, Medicaid-covered substance use benefits include treatment services that are covered only if these services are delivered in locations that are certified as treatment facilities. This is significantly less flexible than the states' Medicaid benefits for mental health services, which can be delivered in a range of settings, including a person's home. To stabilize people with chronic patterns of homelessness in housing, substance use disorder services need to be provided where people live, and at any time that the client is willing to accept and respond to them.

Documentation Requirements for Medicaid Reimbursement

With mental health services authorized under the rehabilitative services option, all care must be justified in terms of its contribution to consumers' rehabilitation or the restoration of functioning that has been impaired by mental illness. We heard about the problems this causes in every case study site, and from virtually every provider. While many mental health service providers are taking steps to integrate attention to health and wellness into their practice, and often adding nurses or health workers to their staff to provide more-integrated care, it can be very difficult for a mental health service provider to get reimbursement for other health-related services.70 If a consumer cuts his arm and needs wound care at home, or needs help to manage his diabetes, the time it takes to clean the wound and put on a bandage or help the client learn to check his blood sugar and make better decisions about diet, nutrition, and reducing alcohol consumption must be justified in words such as "teaching consumer wound care or diabetes selfmanagement as way to reduce anxiety that contributes to exacerbated symptoms of mental illness." Taking the client to a clinic for a medical appointment might be justified only if there is documentation that without assistance, the client might have trouble sitting in the waiting room or communicating appropriately with health care providers because of his delusions or paranoia, and the purpose of accompanying the person to the clinic is to help him with the skills needed to manage those symptoms in a clinic setting. If incorrectly worded, the claim will be denied.

Most states require that for Medicaid to reimburse for a unit of care, the care delivered must relate directly to a goal in a client's treatment plan. These plans must be established at enrollment, so they can only cover what the provider knows about and the client agrees to at that time. Difficulties arise because people's issues may not become clear until service staff have spent some time with them or may fluctuate due to the nature of mental illness. Early on, clients commonly refuse to include certain goals in their treatment plans. Dealing with their substance use is often one of these areas of refusal. Flexibility to change the plan quickly as needs become apparent is important. That flexibility exists in the District of Columbia and is much appreciated by Assertive Community Treatment providers there; some of our other case study sites report having less flexibility, leading to payment difficulties when services are provided for changing client needs that do not tie back directly to goals in the service plan.

Proper justification for and documentation of care is so important for ultimately getting paid that many providers offering Medicaid-reimbursable services to PSH tenants and other people experiencing homelessness devote extensive training and staff resources to getting it right. One Los Angeles agency has recently hired a full-time "quality assurance specialist" to help caseworkers get the documentation right and shepherd it through the appropriate offices to result in payment. Many agencies devote supervisory time to reviewing case notes and to informal teaching, as well as offering regular training sessions in correct documentation.

Meetings, Care Coordination, and Case Conferencing

The people experiencing chronic homelessness or living in PSH on whom this project focuses have health and behavioral health conditions that interact and interfere with functioning in complex ways. In addition, their homelessness needs to be addressed, and their success in using health care appropriately depends on their achieving housing stability. Care coordination is essential for this population. Yet time and again, in all case study sites and from virtually all providers, we heard that in their states Medicaid reimbursement did not pay for the time to do this coordination, case conferencing, and even simple staff meetings.

Los Angeles PSH service providers and people working in county government to align resources for supportive services with housing for people who are chronically homeless often identified care coordination as the biggest gap in funding for PSH and the biggest obstacle to achieving the goal of ending chronic homelessness in Los Angeles. They put the issue this way:

There are no resources to cover care coordination that works to facilitate access to and integration of medical, behavioral health, and social services for people with complex needs, nor is there coverage for "housing case management" services that focus on keeping very vulnerable people who are chronically homeless in housing and helping them to follow prescribed regimens. These services are needed, but Medicaid reimbursement under current rules generally does not cover them and [Los Angeles County] does not have a designated source of funding to pay for them.

Care coordination could be approvable as part of another state plan service. For example, care coordination under the rehabilitative services benefit would include coordination of and referral to needed mental health or behavioral health services. This is a more narrowly defined service than targeted case management, which aims to assist individuals with accessing all needed services.

Case conferencing may also be reimbursable as a part of targeted case management if it is for the purpose of developing or revising the care plan. Alternatively, states could build some costs into the service rate, including costs associated with case conferencing and staff meetings.

5.5.2. Services Integration

An important premise of the Affordable Care Act is that the twin goals of improving health and reducing unnecessary spending can often be served best by coordinating care for the most vulnerable people--those with disabilities and multiple chronic health conditions, often complicated by social isolation. The idea is to "treat the whole person" by assuring that providers helping clients with acute and chronic physical health conditions, mental health issues, and substance use problems work together as members of integrated, multidisciplinary teams while also appreciating that the clients' housing situation and other social determinants of health have a significant impact on treatment outcomes. The most innovative models of care for people with complex conditions call for this type of care coordination and attention to housing stability and social supports. Integrated approaches have certainly proven effective for the population on which this report focuses.

Most Medicaid state plan provisions that govern mental health services were written well before the "whole person" concept emerged, however, with the result that covering the coordination activities that make these innovative models work has often proved challenging. The two accountable care or integrated service/care coordination models we highlight in Chapter 7 are designed to overcome this challenge. Before describing them, however, it is important to appreciate the range of issues we are talking about.

  • Outdated Service Definitions. The longer it has been since a state revised its definitions of Medicaid-covered mental health services, the more likely it is that the most innovative providers will have difficulties matching what their model requires they do to the service definitions that govern claim reimbursement.

  • Silos. Policymakers and providers cited numerous instances in which they had to deal with diverging service definitions, provider certification requirements, care delivery locations and circumstances, and modes of contracting established by various single-focus state agencies (e.g., mental health, substance use services). In many cases, the state Medicaid agency has delegated to other departments of state government much of the responsibility for determining aspects of the Medicaid program pertinent to the departments' areas of responsibility. These service silos make it difficult to deliver and get reimbursed for integrated care for people with multiple co-occurring conditions.

  • Data Systems. Providers often reported that each state or county agency they deal with requires that providers use its data system. Therefore, when a provider manages to access multiple types of funding, including Medicaid reimbursement, to deliver multiple types of service for its clients, it has to do double and sometimes triple data entry, usually with slightly different fields and data definitions. Further, providers report that data systems from these public funding agencies are frequently antiquated, difficult to access, difficult to use, and difficult to extract performance data from for a provider's own use. As providers are implementing new technology for electronic health records, most of those who were interviewed as part of this case study indicated that they have been unable to find products that integrate information about health care, behavioral health services, and other supports needed to provide comprehensive and coordinated care for people with the most complex needs. As a result, even when they are adopting new technology, they often find themselves maintaining parallel systems.

  • Privacy Rules and Data Sharing Restrictions. Public agencies and systems of care almost always have their own data privacy rules, often based on federal or state requirements and/or legislation, that make it difficult to share data across systems to promote integrated client care. Some things may be changing on this front because of the changes in types of data, data access, and data systems that states are developing to comply with various aspects of the Affordable Care Act.

  • Audit Functions. Respondents in case study sites noted instances in which state auditors interpreted program rules that govern separate Medicaid benefits for health care, mental health, and substance use disorder services or allowable costs for categorical programs in ways that did not seem to take into consideration best practice models of integrated care. For instance, an audit of a community clinic delivering integrated primary care and behavioral health services might disallow costs for staff positions that provide case management services or peer support that would be recognized as a standard part of the staffing model for community behavioral health services. In some cases this may be a result of auditors relying on outdated service definitions that have not been revised to reflect new models of care, or an outdated understanding of practice models that could be covered under the definitions of covered benefits.

Case conferencing and care coordination are ways that agencies try to assure services integration for their clients. Many providers believe it would help to facilitate and cover the costs of better care if these activities were included in definitions of Medicaid-covered services. It would also make a considerable difference if the various agencies that govern health care and behavioral health services worked together to better align their requirements and to reduce reporting burdens for providers who are trying to work in an integrated manner to address all of their clients' health and behavioral health needs.

Mental Health Versus Substance Use Disorder Services

Illinois and California provide good illustrations of the difficulties for providers and clients when the rules of mental health and addiction treatment agencies are not aligned to facilitate the delivery of integrated care for co-occurring disorders.71

Illinois funds many community-based mental health services that are covered under Medicaid's rehabilitative services option through the Department of Mental Health's Rule 132, and Medicaid-reimbursable substance use disorder services under the Department of Human Services' Division of Alcoholism and Substance Abuse. Providers of services in PSH reported significant difficulties when trying to coordinate these Medicaid benefits to serve people experiencing homelessness and PSH tenants who have co-occurring mental illness and substance use disorders. The two agencies have different requirements for just about everything, such as time frames for treatment planning and follow-up, allowable treatment types, and amounts and lengths of treatment. To cope with these differences and because it wanted to be able to offer its consumers integrated services, one agency, Heartland Health Outreach, created a crosswalk of rules and developed an integrated assessment and service planning tool that complies with all rules and allows Heartland Health Outreach to serve a target population of homeless people severely impacted by two or more chronic and disabling conditions.

One aspect of the different requirements is particularly relevant for agencies working with people who have been homeless a long time and who have both mental health and substance use disorders. Most Division of Alcoholism and Substance Abuse funding only covers care delivered in a treatment facility licensed by the Division of Alcoholism and Substance Abuse. Rule 132/Medicaid Rehabilitation Option care, in contrast, is heavily oriented toward services delivered in the community, mostly in people's homes. When PSH residents need and want substance use related services, they must go to a treatment facility to get them, while staff offering mental health services may come to where the clients live. Many agencies in Chicago's homeless assistance network may serve people with co-occurring mental illness and substance use disorders, but very few of them have a Division of Alcoholism and Substance Abuse facility license that allows them to deliver Medicaid-reimbursed substance use disorder treatment services. Mental health providers that see a lot of people with co-occurring substance use disorders try to offer some services to meet their needs but find themselves hard pressed to cover the cost. As a result, many mental health agencies have limited capacity to deliver integrated care for people with the most severe substance use disorders.

California's Medicaid-covered benefits to address mental health and substance use disorders are similarly defined separately, and these benefits have been administered separately not only at the state but also at the county level. While some California counties have created departments of behavioral care to administer both mental health and substance use disorder services, in Los Angeles County, one department administers mental health services while another administers substance use treatment services, including services that are covered by Medicaid. These benefits and treatment programs are usually not integrated or well-coordinated with each other or with other Medicaid-covered health care. As is true in Illinois, California has provided a limited package of Medicaid-covered benefits to address substance use problems and requires that nearly all of these services be provided in licensed treatment facilities to qualify for Medicaid reimbursement.72 For people with histories of chronic homelessness who live in PSH, the services that are often most needed focus on reducing harmful substance use and intervening quickly during times of relapse use to reduce problem behavior and avoid crises that could lead to the loss of housing. These services, which facilitate change and support recovery, are delivered in the person's home or elsewhere in the community but not in a certified treatment facility. Medicaid coverage for substance use services would be available only when tenants are willing and able to enroll in a treatment program and participate in services delivered in certified treatment locations. Medicaid reimbursement is not currently available for the service activities that are frequently a part of the PSH service model, including motivational interviewing, substance use disorder recovery support groups that meet on-site in PSH, individual counseling and coaching to support recovery and relapse prevention, and other services that may be integrated into the delivery of primary care or mental health services for PSH tenants.

5.5.3. Getting Paid


We sometimes heard during site visits that reimbursement rates for the services needed by people with patterns of chronic homelessness were too low. Several Minnesota providers dropped Adult Rehabilitative Mental Health Services-funded programs for this reason. In the District of Columbia, the Department of Mental Health found that it would have to raise its Assertive Community Treatment rates to get any agency to provide the service. In 2008, the agency committed to expanding these services from somewhat fewer than 400 people to about 1,200 people. It offered contracts but got no takers. In addition, Pathways-DC had already informed the Department of Mental Health that it could no longer afford to provide Assertive Community Treatment services at the current rate. Working with the District of Columbia's Medicaid agency, the Department of Mental Health increased the reimbursement rate per increment of time by 25 percent, using its own departmental funds for the state match. This level of funding proved to be sufficient to keep Pathways-DC in business and attract new providers. Also in the District of Columbia, however, some mental health providers will not take people enrolled in certain Medicaid managed care plans because the plans' reimbursement rates for mental health services are too low.

Payment Methods and Limitations

Payment structures varied across our case study sites and also within each site depending on the type of services provided. Medicaid reimbursement for most of the PSH services that are covered as mental health benefits in our case study sites is based on claiming (or billing) for covered services in 15minute increments. Targeted case management services in Minnesota have a per-person permonth payment structure.

Illinois providers note that, as clients continue to need supports that vary over time but do not reliably dwindle to nothing, the state Medicaid office gives their requests for payment or authorization for continued services increasing scrutiny. In response to budget limitations, systems have been put in place to manage utilization of the most-intensive and costly services and to encourage transitioning people to lower, less costly levels of care when possible. Further, some types of care have limits on the units of service that can be supplied, and these limits are sometimes considerably lower than the clients with complex needs require (e.g., five hours of case management a month when providers say that it takes 20 hours to really help some clients). Providers in other states also reported unit-of-service limitations that are not realistic, given the needs of people who have experienced chronic homelessness.

The District of Columbia's Assertive Community Treatment teams are paid at a rate established by the Department of Mental Health for each 15-minute increment of time spent with a client. Unlike the situation in many states, however, there is no limit on the number of service units that team members may spend with clients and be reimbursed for. If a staff person spends two hours with a client, Medicaid would cover all eight 15-minute service units. The Pathways-DC director feels that this is preferable to a payment structure that offers a fixed monthly rate for program participants, which has been used in some states for ACT programs, because it allows for additional reimbursement when serving clients who need more-intensive services and supports.

Service providers in other communities frequently complained about the burdens associated with documenting all covered services in 15-minute increments. They often said that they find it very challenging to reconcile billing and documentation requirements with the expectation for "doing whatever it takes" to engage with and connect the most vulnerable people to housing and to deliver flexible, client-centered care to support stability. Many of these providers told us that they believed that a monthly per-member rate, or a set of rates that could be adjusted for clients in need of varying levels of support, would be a more appropriate payment mechanism for the moderate level of services delivered by Community Support Teams and the more-intensive models of care such as Assertive Community Treatment. They believe that monthly rates covering a flexible package of services would allow service providers to spend more time providing direct services for clients and coordinating their care and less time with paperwork.

Knowing How to Bill

We did not interview many agencies in our case study sites that had recently become Medicaid providers, so we do not know if issues related to learning billing procedures, submitting forms, and knowing timing are widespread. The clearest discussions we had with behavioral health providers new to Medicaid were in Los Angeles.

The Los Angeles County Department of Mental Health has provided some training for contract providers related to documentation and billing requirements to get Medicaid reimbursement for services to people who are homeless or leaving homelessness, including the outreach, engagement, and housing-related services that are included in the county's coverage for both moderate and intensive service levels. But service agencies new to using Medicaid or trying to figure out how to comply with service planning and documentation requirements say that they have a hard time finding this guidance. Neither the state nor the county Department of Mental Health had provided systematic guidance about how to obtain Medicaid reimbursement for flexible, client-centered, and multidisciplinary team models of service, even though the county agency funded several demonstration projects with just these configurations and goals in 2011.

Service agencies that are becoming Medicaid providers need clear guidance that is accessible and welldocumented to help build staff capacity and implement systems that meet Medicaid requirements for service plans, case notes, billing, and other documentation. One provider said that "myth buster" guidance from CMS is needed.

Reimbursement for Services

Reimbursement to providers for Medicaid services comes after the services are provided. The time lag between an agency paying its staff to help a client and receiving reimbursement for the cost of that care can be very important. Small nonprofit agencies often do not have the financial resources to front the cost of care that may take months or sometimes years to recover through public payments.

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