Medicaid and Permanent Supportive Housing for Chronically Homeless Individuals: Emerging Practices From the Field. 8.7. Minnesota Medicaid Waiver Proposal Included Housing Stabilization Services

08/20/2014

While many of the financing and service delivery approaches described in this report have significant implications for the services available to people experiencing chronic homelessness and PSH tenants, including services that are delivered in PSH settings, for the most part the Medicaid benefits we have described were not specifically designed to cover the services that focus on helping people get and keep housing. In August 2012, Minnesota submitted a proposal to CMS for a Medicaid 1115 waiver to implement the state's Reform 2020 Medicaid reform package. The waiver proposal, which emerged from months of planning by state agency officials and stakeholders, contained several proposed changes to Minnesota's Medicaid program as part of a demonstration program, including a new Housing Stability Services Demonstration.

As proposed, the Minnesota waiver would have established a new benefit called Housing Stabilization Services, with the goal of better serving adults with chronic medical conditions who are homeless or experiencing housing instability and who frequently use high-cost medical services. During the study period, state officials, PSH providers, and other stakeholders engaged in efforts to reduce homelessness were hoping that CMS would approve this demonstration program as part of the state's waiver application, and that this would provide an opportunity to learn about the impact of housing stability services using data that can be tracked at the state level. In negotiations with CMS in 2013, state officials decided not to pursue this component of the waiver proposal because of competing priorities and concerns about meeting federal requirements related to cost neutrality in the federal Medicaid program. State officials and stakeholders were disappointed, but hoping to find another way to use Medicaid financing to cover the proposed housing stabilization services. They are considering other approaches, including the possibility of creating an optional benefit under Section 1915(i) similar to the approach taken in Louisiana to cover some of the services in its Permanent Supportive Housing Program.

The Minnesota proposal remains an interesting example of an approach to using a Medicaid waiver to provide coverage for services that support housing stabilization for people with disabling health conditions who experience homelessness. As it was proposed in the state's waiver application, for some PSH service providers and residents, the new housing stabilization benefit would take the place of the payment mechanism for services currently funded through Minnesota's Group Residential Housing program. Group Residential Housing is now funded by the state without any federal match. For other program participants, including people who are currently experiencing homelessness, the proposed new benefit would expand access to services in PSH. The state proposed defining eligibility for the new service using risk factors that indicate functional need rather than relying solely on specific diagnoses. The target population for housing stability services includes two groups of Medicaid recipients. The state proposed providing this benefit to 1,500 people in each of these two groups:

  • Target Group One: Homeless, using a definition that is consistent with the HUD definition of homelessness (including people living on the streets or in shelters, as well as people who are exiting an institution after a stay of less than 90 days if they had been living on the streets or in shelter before entering the institution) and eligible for the state's General Assistance program based on illness, incapacity, SSI/SSDI pending or appealing denial, or advanced age.

  • Target Group Two: Aged, blind, or disabled people who are eligible for benefits provided by the state's Group Residential Housing program and living in Group Residential Housing "conforming settings"--meaning "a housing and services establishment" (as defined in state law) that usually includes five or fewer beds or uses scattered housing locations--for which Group Residential Housing is paying for services. For these projects or housing units, the Medicaid benefit would replace Group Residential Housing-service rates now paid by the state.

The housing stabilization service benefits proposed in the waiver would include service coordination activities designed to facilitate stable health and well-being across multiple systems including medical, mental health, chemical health (substance use), employment, and legal. Service coordination activities would include assessment, service plan development, connection and coordination of services and benefits, monitoring, personal advocacy, transportation to appointments, and assistance with application for benefits. The package of benefits would also include one or more of three additional components:

  • Outreach/Inreach services to identify eligible people, complete a risk assessment, engage them in a trusting relationship, provide stabilization services to address immediate and basic needs, and transition them to resources and supports to address ongoing needs.

  • Tenancy Supports including housing navigation to identify individual housing needs and preferences, assess barriers and develop a person-centered plan for getting and keeping housing, provide assistance to overcome barriers, and help with searching and applying for housing and negotiating with landlords, setting up a household, understanding tenant responsibilities, budgeting and financial education, and negotiating conflicts with landlords and neighbors.

  • Community Living Assistance to support basic living and socialization skills, household management, medication education and assistance, monitoring of overall well-being and problem solving, and tenancy stabilization supports.

The budget assumptions in the waiver proposal reflected a per-person monthly rate of $600 for these services. The state budget staff used the findings from peer-reviewed research on the impact of PSH to estimate the cost savings associated with reductions in the use of other Medicaid-reimbursed health care (such as hospitalization). They estimated that housing stabilization services would be associated with a reduction averaging 25 percent of other Medicaid costs, calculated on a per-member per-month basis using cost data from the Minnesota Medicaid program for beneficiaries who are in the two target population groups. The analysis also included a lag time from the initiation of services (and costs) to achieving savings. Based on available data, estimates of health costs and potential savings are greatest for members of group one, which includes people who are homeless and not yet receiving services or housing through the state's Group Residential Housing program.

During the study period, while government officials and PSH providers were waiting for CMS to respond to the state's waiver proposal, many details had not yet been worked out. Providers of services in PSH had plenty of questions about how the benefit would be implemented if approved by CMS, and state officials were beginning to engage stakeholders in discussions about provider qualifications, more detailed service definitions, and state expectations for the quality of services. The proposed housing stabilization services benefit and payment mechanism was expected to be a significant change for many PSH providers who currently receive funding through the Group Residential Housing program. With the existing Group Residential Housing funding mechanism, the state does not specify the kinds of services to be provided, and both program models and the quality of services vary significantly. State officials anticipated that some Group Residential Housing funding would remain available because some current Group Residential Housing providers do not have the capacity to become providers of Medicaid-covered services.

Many providers serving PSH tenants and their partners in local government and nonprofit intermediary organizations such as the Corporation for Supportive Housing were active participants in the planning process that helped to shape this component of the state's Medicaid waiver proposal, and they are likely to stay involved in efforts to find other ways to use Medicaid to cover these proposed benefits. They believed that the proposed housing stabilization services would address the needs of people experiencing chronic homelessness. One limitation of Group Residential Housing has been that PSH service providers are paid only when a person is housed, while providers who work with people who have experienced chronic homelessness recognize that much work must be done before a person moves into housing and, if a person loses housing, it is important for the service provider to maintain a relationship and help the person find housing again. One big advantage of the proposed housing stabilization benefit is that it would cover services provided during the process of engagement, stabilization, housing search, and follow-through, and offer the flexibility needed to cover supports to improve housing stability and consistency of care for participants. After all of the work that went into designing the benefit and demonstration program as part of the waiver proposal, these stakeholders are likely to continue working to find a way to move forward with this approach.

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