Medicaid and Permanent Supportive Housing for Chronically Homeless Individuals: Emerging Practices From the Field. 8.4. Coverage for Services to Address Substance Use Disorders


In states that have expanded Medicaid eligibility under the provisions of the Affordable Care Act, a significant number of adults who are eligible because their incomes are low enough to qualify (up to 133 percent of the federal poverty level) are likely to have substance use disorders. The Affordable Care Act includes services for substance use disorders as one of the ten essential health benefits that state Medicaid programs must provide to newly eligible adults; all health insurance plans that are sold on Health Insurance Exchanges must also include all ten elements.

Some states are making changes to provide enhanced Medicaid benefits to cover substance use disorder treatment services for newly eligible adults, including people experiencing homelessness, to meet the requirements of the Affordable Care Act. Depending on how states define and implement these benefits, these changes could potentially reduce some existing obstacles to the integration of services to address substance use disorders with mental health or primary care services. States could, for example, choose to cover the costs of multidisciplinary team models that provide mobile, flexible services to people experiencing chronic homelessness. Alternatively, if states continue to define and administer Medicaid benefits through separate systems for medical care and mental health and substance use disorder services, without other efforts to facilitate integration of care for people with co-occurring conditions, or for people whose untreated substance use disorders have an impact on their health and health care costs, those policy decisions may result in maintaining or exacerbating existing obstacles.

One of our case study sites is already taking action to address coverage of substance use disorder services. In 2013, with support from the governor and the state legislature, the California Department of Health Care Services decided to expand Medicaid coverage for some substance use treatment services, for both newly eligible people (the expansion population) and adults already eligible for Medicaid. Before 2014, California offered only three Drug Medicaid benefits for most adults: methadone maintenance, naltrexone for opioid dependence, and Outpatient Drug-Free Services. Other covered services included intensive outpatient treatment for pregnant and post-partum women, children, and youth; and residential treatment for pregnant and post-partum women. Beginning in 2014, California is making these additional services available to the general adult population. To qualify for Medicaid reimbursement, these services must be delivered in settings that are certified as treatment facilities.

The expansion of coverage for treatment services is expected to make it easier for PSH tenants to have access to residential treatment or intensive outpatient treatment services. However, the requirement that treatment occur only in certified facilities is expected to be an obstacle to using Medicaid to pay for services that are delivered in PSH, including the services that help to engage people whose substance use problems are a threat to their safety or housing stability and the services that motivate people to participate in treatment. Most PSH service providers are not currently certified as providers of Drug Medicaid services, although some are now working to establish programs that can meet the requirements for certification so they can tailor programs to meet the needs of the people they serve and have access to Medicaid reimbursement.

For states not expanding their Medicaid programs, serving individuals with substance use disorders will still be difficult. The major reason for the limitation in Medicaid is that persons whose disabilities are primarily attributable to substance use are not eligible for Supplemental Security Income, and as a result they will generally not be eligible for Medicaid in nonexpansion states.105 Historically, most Medicaid state plans had limited coverage related to substance use disorder treatment services.

In every case study site, PSH providers and other stakeholders involved in efforts to end chronic homelessness reported that Medicaid benefits for services to address substance use disorders are very limited, and often provide coverage only for treatment services delivered in designated facilities. This makes it extremely difficult, if not impossible, to use Medicaid to pay for some of the services and supports needed to implement a housing-first strategy for people with histories of chronic homelessness and the most severe, long-term substance use disorders. Even for persons with serious mental illness who have co-occurring substance use disorders, mental health service providers frequently describe limitations that prevent them from using Medicaid to pay for the services they deliver when they are directly addressing substance use problems. Without the ability to use Medicaid to pay for services that focus on substance use using interventions that can be delivered in PSH and other community settings, providers working with people experiencing chronic homelessness and those who are living in PSH have limited options for helping clients overcome their addictions sufficiently to get and keep the housing that is critical to their recovery and stability.

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