Medicaid and Permanent Supportive Housing for Chronically Homeless Individuals: Emerging Practices From the Field. 6.3. Seniors and People with Disabilities Moving into Managed Care


We now look at recent developments in enrolling seniors and persons with disabilities into Medicaid managed care and linking them to health services in three of our case study communities--Minnesota, Illinois, and California.


During the time frame of this study (2010-2012), Minnesota saw a significant increase in enrollment in Medicaid managed care plans, as large groups of people moved into managed care or moved from one plan to another as a result of state policy changes. Beginning in January 2012 (with phased-in enrollment during 2012), people with disabilities ages 64 and younger who had been covered by fee-for-service Medicaid were asked to enroll in a managed care health program called Special Needs Basic Care.

Some individuals are excluded from Special Needs Basic Care enrollment, and anyone can choose not to enroll (opt out) and instead stay in fee-for-service (FFS). The state's budget assumptions anticipated that about 50 percent of people would opt out.

The Special Needs Basic Care managed care program was designed for Medicaid-eligible people with disabilities, including those who are dually eligible for Medicare benefits. It began in 2008, with about 6,000 people enrolled in the plans. Under expansion beginning in 2012, enrollment in these plans grew to more than 37,600 people in April 2013.73 The plans are responsible for covering basic health care and most behavioral health care services. Basic health care includes inpatient and emergency hospital care and up to 100 days of nursing home care; behavioral health care services include the targeted case management (TCM) services that are often connected to PSH.

State legislation enacted in 2011 also set targets for reductions in hospital emergency department utilization, rehospitalizations, and inpatient hospital admissions--with penalties and incentives paid for by "withholds" from payments to health plans. The strategy is to withhold a portion of the capitated payment to plans and use the money for incentive payments. The incentive payments and withholds push the plans to focus attention on service strategies that reduce avoidable hospital admissions and re-admissions. These new arrangements are challenging MCOs and provider networks to change their delivery systems to "bend the cost curve."

As Special Needs Basic Care enrollment expansion got under way in Minnesota, some of the agencies serving people who are chronically homeless and PSH tenants were wary, uncertain about how the change from FFS to managed care would impact access to health care for their clients. They were also concerned about effects on payments to mental health service providers who already received Medicaid reimbursement for providing TCM services.74 These concerns proved groundless, however.

Over time many of the mental health service providers who deliver TCM services in PSH have been able to establish contracts with the Special Needs Basic Care health plans, through which they continue to receive reimbursement for these services at monthly rates that are comparable to the rates they had previously negotiated with the counties. One MCO was permitted to establish a three-tiered rate-structure, with higher rates paid for clients who need more frequent intensive services and lower rates paid for clients who need less support. The MCOs also offer transportation to medical appointments, and some also offer fitness, health promotion, nutrition, dental, and care management services for their members, as well as other resources.

Based on our interviews with mental health service providers, the Special Needs Basic Care plans have generally been good for mental health clients, including both people who are currently homeless and PSH tenants. They have added some complexity for provider organizations in MCO contractor service networks, however, because arrangements with each MCO are a little bit different, both in terms of payment to the mental health service providers and the other services available to plan members.


In Illinois, state law enacted in 2011 requires that at least 50 percent of Medicaid beneficiaries move into some form of "care coordination" by January 1, 2015. About 2 million people are expected to enroll in some form of care coordination by this date, with about a million people continuing to receive care through FFS arrangements after that time.

The director of the Illinois Department of Healthcare and Family Services (HFS) envisions that the state will develop several different approaches to care coordination. The state's approach includes but is not limited to managed care health plans operated by commercial insurance companies or health maintenance organizations that accept full-risk capitated payments. In addition to these models, Illinois care coordination models also include:

  • Managed Care Community Networks (MCCNs). Provider-organized entities accepting full-risk capitated payments.

  • Care Coordination Entities (CCEs). Provider-organized networks providing care coordination for risk-based and performance-based fees, but with medical and other services paid on a feeforservice basis.

The roll-out plan for care coordination began with a focus on seniors and persons with disabilities. This group, comprising16 percent of the Illinois Medicaid population, incurs 55 percent of Medicaid costs. The first phase began in 2011 with the enrollment of seniors and persons with disabilities into traditional managed care plans operated by insurance companies in the "collar counties" surrounding Chicago. HFS selected the first group of six CCEs and MCCNs in late 2012, and began negotiating contracts under the HFS Care Coordination Innovations Project. Implementation of these projects got underway in 2013. The state adopted a plan to expand care coordination through these three models to other population groups and parts of the state during 2013 and 2014.

The early experience with implementing managed care for seniors and persons with disabilities who are Medicaid beneficiaries in the collar counties has been challenging. The two commercial MCOs selected by the state had little experience enrolling and managing care for people with mental illness or other disabilities. The plans have lacked adequate provider networks with the capacity to serve people with behavioral health disorders and in particular to provide integrated services to people who have co-occurring mental health and substance use disorders. So far, agency leaders and other stakeholders report that the commercial managed care plans have not moved far toward changing the delivery system to improve access and health outcomes for seniors and persons with disabilities. Providers who deliver services to people experiencing homelessness in those counties complain that the two MCOs have different and complex billing requirements and procedures for pre-authorization that make working with them difficult.

The state's Care Coordination Innovations Project, launched in 2012, is an ambitious effort by the state and some of its most innovative providers of health care and behavioral health services to create alternative approaches to coordinating and integrating care for some of the costliest and most vulnerable and disabled Medicaid beneficiaries. One of the new CCEs, Togther4Health, has been developed under the leadership of Heartland Health Outreach, a Health Care for the Homeless program, working in partnership with many of Chicago's leading providers of health care and behavioral health services for people who are currently homeless and for PSH tenants. Together4Health will be discussed in the next chapter of this report.


In California, the mandatory enrollment of seniors and persons with disabilities into Medicaid managed care plans proceeded rapidly, starting only seven months after the Centers for Medicare and Medicaid Services approved the state's Medicaid waiver request in November 2010. In 16 counties, nearly 240,000 people were required to choose a health plan or have one assigned by the state, and to select a primary care provider or medical home or have one assigned to them. For many people, the assignment process required or resulted in a change in health care providers. The first group was mandatorily enrolled in Medicaid managed care on June 1, 2011, and the transition process was completed in May 2012.75

Health care providers and advocates reported significant challenges with the process of transitioning people with disabilities into managed care.76 Written notices sent to beneficiaries by the state Medicaid office were complex and hard to understand. The notices often failed to reach people because of outdated contact information, and this was particularly a problem for people with chronic patterns of homelessness. Statewide, fewer than half of the beneficiaries chose a health plan, with the rest being assigned to a plan by default.

The California Medicaid managed care plans to which many people were assigned received only limited information about their new members who are seniors and persons with disabilities. LA Care, the largest of the Medicaid managed care plans in Los Angeles County (and the largest public managed care health plan in the country) reported not receiving any claims history data for new members until 8-10 weeks after they were enrolled. At the same time, the plan was required to assign primary care providers to all new members within 24 hours of enrollment, if the new members did not select a provider themselves. Therefore, many assignments were made without knowing where people had been receiving care. The frequent result was confusion among both beneficiaries and health care providers and disruptions in continuity of care.

When a person experiencing homelessness or a PSH tenant seeks medical care from a health care provider located in a shelter or PSH project, or when a health care provider participates in outreach and efforts to engage and serve people experiencing homelessness, the Medicaid managed care plans do not reimburse those providers unless they have been assigned as the primary provider for that person. The providers must request a reassignment, which means that the health plans must commit staff resources to processing reassignment requests.

In addition to problems with enrollment and assignments, the Medicaid managed care plans and provider networks had limited experience serving seniors and persons with disabilities before the rapid expansion of enrollment in 2011 and 2012. Most plans and many of the health care providers who accepted the new group of seniors and persons with disabilities lacked the experience or the capacity to serve people with complex needs that include mental illness and often patterns of homelessness and co-occurring substance use disorders.

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