Medicaid and Permanent Supportive Housing for Chronically Homeless Individuals: Emerging Practices From the Field. 8.6. Health Homes


The Affordable Care Act created a new optional Medicaid benefit that states may use to create "health homes" for people with chronic conditions, including mental health conditions, substance use disorders, and chronic physical conditions.108 States may develop more than one health home benefit program for different target groups of beneficiaries. As an incentive for states to add health home benefits to their Medicaid plans, the Affordable Care Act provides an enhanced federal matching rate of 90 percent for health home costs during the first two years (eight quarters) of implementation for each defined benefit. The goal of this new benefit is to integrate and coordinate all primary, acute, behavioral health, and longterm services and supports for each beneficiary assigned to a health home, with the intent to treat the whole person.

Some PSH providers and advocates engaged in efforts to reduce chronic homelessness hope that this new benefit could provide a way to pay for a limited service benefit provided in PSH, particularly for people who have complex health needs related to chronic illness and mental health or substance use disorders.109 As of early 2014, 14 states had already received CMS approval to provide Medicaid-covered health home benefits for health conditions that are present among people experiencing chronic homelessness. However, none of the states involved in this study have yet developed state plan amendments that would create health home benefits designed to cover the services needed by people experiencing homelessness and PSH tenants; four are in the process of doing so.

  • In Illinois, the state expects to submit a proposal to CMS for health home benefits that would cover many of the care coordination services that will be delivered by the Care Coordination Entities described in Chapter 7, including Together4Health. State Medicaid officials have not yet begun to develop a draft state plan amendment to cover these services, and they indicated that they are reluctant to move forward too quickly because they want to ensure that when the state adopts the new optional benefit, a sufficient number of people will be ready to enroll in health homes to make the best use of the opportunity for a higher federal matching rate during the first eight quarters.

  • California received a federal planning grant to begin developing an approach to covering health home services as an optional benefit. Progress on this planning appeared to have stalled in 2013, however, despite considerable interest among stakeholders. This stall was due, in part, to state officials' focus on tasks related to preparing for the expansion of Medicaid eligibility in 2014, on planning for implementation of the Coordinated Care Initiative, and on other efforts related to implementation of the Affordable Care Act. Advocates for supportive housing and health care for people living in poverty, including people experiencing homelessness, worked hard to help pass legislation authorizing the state's Department of Health Care Services to design and seek federal approval for a health home program consistent with federal law, if this can be accomplished without any cost to the state. The governor signed this legislation in 2013. The legislation directs the state to target health home services for persons with chronic co-occurring physical health, mental health, or substance use disorders that are prevalent among frequent hospital users and persons who meet additional criteria to be developed by the department using one or more of the following indicators:

    • Frequent inpatient hospital admissions, including hospitalizations for medical, psychiatric, or substance use related conditions.
    • Excessive use of crisis or emergency services.
    • Chronic homelessness.

The legislation provides that local governments or foundations would be responsible for covering the nonfederal share of costs for these services, if permitted under federal law. One foundation, the California Endowment, has offered to provide funding to cover the nonfederal share of costs for the first two years of implementation if California implements Medicaid health home services.

  • In January 2010, before the Affordable Care Act became law and as directed by state legislation enacted in 2008, Minnesota created a rule related to health care homes (also known as medical homes). The state established standards and criteria for certifying health care homes as part of a statewide, multipayer initiative.110 Minnesota's approach to health care homes is informed by the recognition that a small percentage of patients drive a large percentage of health care costs. The state legislation directed the state to consider psychosocial risk factors in addition to diagnoses in setting rates for health care home services as part of contracts with managed care plans. As a result, there is a "complexity-adjusted" payment methodology for certified health care homes, with higher rates paid for services provided to persons with serious mental illness and those whose primary language is not English, as well as for persons with multiple chronic health conditions. Currently there is no adjustment for homelessness or other risk factors, such as serious substance use disorders or involvement in the criminal justice system, although those circumstances are recognized as having an impact on consumers' needs for health care home services.

For Medicaid managed care plans, the highest rate paid for health care home services is a little more than $60 a month.111 State officials recognize that this is "a drop in the bucket" compared with the cost of delivering the services needed by the most vulnerable and complex individuals, including those experiencing chronic homelessness. Currently these services are not covered as Medicaid health home services under the optional benefit created by the Affordable Care Act, although the state has received a federal planning grant and may be exploring the opportunity of obtaining the enhanced federal match that would be available if the state pursues this approach. The Minnesota Department of Health also created a statewide learning collaborative that convenes "Learning Days" for health care homes and state agencies to exchange information and enhance their understanding of best practices.

  • The District of Columbia received a federal planning grant to develop a health home benefit for persons with mental illness and those with HIV/AIDS. People experiencing homelessness are not a specific focus of planning for these benefits, but could be included if they have the covered health conditions. The local government agency with primary responsibility for PSH and efforts to end chronic homelessness had not been engaged in this planning process during the study period.

Connecticut and Louisiana were not engaged in planning or developing Medicaid health home benefits during the study period.

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