Medicaid Financing for Services in Supportive Housing for Chronically Homeless People: Current Practices and Opportunities. 6.5. Challenges, Obstacles, and Limitations of Home and Community-Based Services


While it would appear that state efforts to enable people with disabilities to live in non-institutional, community-based settings should align with efforts to use PSH to end homelessness for people with poor health and high levels of disability, often that is not the case.

6.5.1. Separate Service-Providers, Advocates, and Government Organizations

Most of the programs and categorical funding streams used to serve homeless people are separate and distinct from the programs designed to support de-institutionalization, and the resources of the homeless assistance system have been focused on serving people living on the streets or in emergency shelter. In many communities, separate groups of advocates and service-providers, and often separate groups of government officials, work on behalf of the different populations to create housing opportunities and figure out how to finance and deliver support services linked to housing. While the housing and support needs of people are similar, programs, policies, and financing mechanisms have often been developed on parallel but distinct and sometimes competing tracks.

6.5.2. Focus on Living in Integrated Settings May Appear at Odds with the Program Models of Some Permanent Supportive Housing

Legal and policy advocates for de-institutionalization, as well as many people with disabilities and their family members, have placed a high priority on providing opportunities for people with disabilities to live in integrated settings--that is, the settings that are not only for people with disabilities. They have often been strong advocates for scattered-site models of supportive housing, or models in which a few supportive housing units are integrated into affordable housing developments in which most of the housing units are not designated for homeless people or other people with disabilities. Supporters of using Medicaid-financed HCBS to expand the availability of services linked to housing for people with disabilities are concerned that these resources not be used to sustain or re-create residential settings that resemble institutions. In April 2011, CMS published a Notice of Proposed Rule-Making that reflects these concerns and conveys expectations about the delivery of services financed through HCBS waivers in home and community-based settings.34

Generally the goals that relate to community integration are shared by advocates, service-providers, and housing developers who have been working to create and sustain PSH. Exhibit 1 summarizes some of these areas of agreement, based on criteria articulated in the CMS Notice and the definition of PSH “fidelity” contained in SAMHSA’s EBP KIT,35 as well as standards of quality developed by the Corporation for Supportive Housing.36 These values and practices were reinforced by the PSH sites we visited and others we learned about for this project.

However, some organizations and policy makers working to reduce chronic homelessness are reluctant to target the available supply of housing units to groups other thanthe most vulnerable homeless people, particularly given the time and level of effort required to assemble the financing and secure approvals for a new supportive housing project. When they build or rehabilitate apartment buildings for PSH, homeless service-providers and housing developers often want to maximize the number of these units that are available to get people off the streets. As a result, in many apartment buildings that have been developed as PSH, all or most of the units are designated for people with disabilities who are homeless.

EXHIBIT 1. Commonalities in PSH and HCBS Housing Standards
Home and Community-Based Settings/Permanent Supportive Housing
SHOULD Have These Features…
… and NOT be located in a building/facility that provides institutional or custodial care
… and NOT have the characteristics of an institution, such as
  • The person has a lease.
  • Setting is an apartment or housing unit with individual living and sleeping area, and usually has private bathroom and kitchen.
  • People can choose whether to share a living arrangement and with whom.
  • People have keys and can lock their own apartments and come and go as they choose.
  • They are free to receive visitors and leave at times and for durations of their choosing.
  • People can remain where they live as they age and/or support needs change.
  • Access to the greater community is easily facilitated based on the individual’s needs and preferences.
  • People can interact with people without disabilities to the fullest extent possible, and can access community activities at times, frequencies, and with people of their choosing.
  • If the plan is shared with the landlord, or the housing provider is also the service-provider, compliance with the tenant’s service plan is not a condition of the lease.
  • People have choice in their daily living activities, such as eating, bathing, sleeping, visiting, and other daily activities.
  • Segregated from the larger community.
  • Regimented meal and sleep times.
  • Limits on visitors.
  • Lack of privacy.
  • Limits on the person’s ability to engage freely in community activities.

While scattered-site PSH using tenant-based rent subsidies and mobile services offer one option for people to live in integrated settings, some PSH providers point out that just placing a disabled person in scattered-site housing is not enough to assure “integration.” Without adequate supports, people may end up isolated and lonely. Tales of people drifting back to hover over their case worker’s desk, where at least there is company, are too common to ignore. Site-based PSH can be effective for those who need around-the-clock coverage of a front desk to respond to crises or problem behaviors and control the flow of visitors to the building. Site-based PSH also offers opportunities for peer support and participation in a “self-help” community of people who have shared experiences.

Negotiating a 1915c Waiver: San Francisco

Laguna Honda Hospital is a large, county-operated skilled nursing facility that serves many homeless people with complex, disabling health conditions. Since 2007, the SFDPH has been working with California’s Department of Health Care Services (DHCS) to design and get CMS approval for a 1915c waiver to finance some of the services provided in PSH to people who have been discharged or diverted from this hospital. The California Legislature authorized the waiver, provided that San Francisco would cover the non-federal share of costs, and CMS received the waiver application in June 2010. SFDPH wants to establish a more flexible reimbursement mechanism to pay for the person-centered services that support community-living for people with high levels of disability who would otherwise be living in Laguna Honda Hospital or on the streets.

Working with state Medicaid (Medi-Cal) officials, SFDPH established a three-tiered rate structure to pay for services to PSH tenants whose conditions would meet criteria for admission to Laguna Honda or another skilled nursing facility. SFDPH hoped that these rates would be paid daily and used flexibly for “wraparound services” provided by nurses and case managers. (The rates were first set at $110, $80 and $55 per day, depending on the level of functioning and need for medical and behavioral health services.) Program managers had hoped that daily rates would significantly reduce administrative costs of documentation and billing, while paying for staff whose costs the FQHC billing mechanism will not reimburse. This may not be possible, however, because of requirements associated with documenting San Francisco’s Certified Public Expenditures that will provide the match for FFP through Medicaid. Instead, the rates will be used to make interim payments. These will have to be reconciled with cost reports later, and will also need to be supported by time studies that determine the actual costs for staff time to provide covered services to PSH tenants who meet waiver eligibility criteria.

The SFDPH is still working with the state and CMS to gain approval of the waiver and develop an approach to payment that will be feasible and meet applicable requirements. The process has taken several years. The state and federal staff working with the SFDPH have expressed misgivings about whether some of SFDPH’s PSH is consistent with an evolving interpretation of home and community-based housing. State Medicaid program officials have informed SFDPH that waiver services cannot be provided in buildings that do not offer tenants private bathrooms or cooking facilities, which would exclude some renovated SRO buildings (formerly residential hotels), and that regional CMS or DHCS officials will have to inspect and approve every PSH site in which waiver services will be delivered.

A significant number of new supportive housing development projects are integrating PSH units into affordable housing or mixed-income developments that serve other low-income people, with and without disabilities, and sometimes with a range of incomes.37 PSH service-providers help tenants explore and use neighborhood and community resources, including stores, libraries, public transit, and recreational facilities. Another approach to community integration is to have PSH buildings include ground floor commercial spaces occupied by grocery stores or other neighborhood-serving businesses and meeting rooms that are made available for neighborhood organizations, helping PSH tenants connect with their neighbors.

Establishing Policy for HCBS: Illinois

Many people in Illinois are in Institutions for Mental Disease (IMDs). A very recent consent decree (Williams) obliges the state to “assess” each IMD resident for capacity, and “alert” the person to opportunities to live in less restrictive settings in the community. Illinois is also facing lawsuits related to non-elderly people living in nursing homes, many of whom have multiple medical conditions and complications of substance abuse and/or mental illnesses. Some were homeless before entering the nursing home and may have been discharged to a nursing home after a hospital stay because they had nowhere to go. The state faces considerable pressure to see how many of each group can live in community settings with HCBS that can be reimbursed through Medicaid.

There is also growing concern in Illinois about the large number of people with mental health and/or substance use disorders who fill many medical-surgical beds in a few hospitals. Their average lengths of stay tend to be longer than those of other patients because the hospitals have nowhere to which they can discharge patients safely. Homeless patients discharged without a place to live cannot receive adequate follow-up care, and end up cycling back into the hospital again.

The Williams consent decree is pushing the state to increase the availability of HCBS linked to housing. These developments could provide new opportunities for the state to expand the use of benefits such as ACT and CSTs or to adopt more-flexible funding for services that help people with complex health problems live in community settings. Several state officials consider that the current benefit definitions are too fragmented and that it may be possible to achieve savings that will offset the costs of new or expanded benefits, if people can receive services at home or in the community rather than high-cost Medicaid-funded or state-funded care in IMDs or hospitals and nursing homes.

The state’s efforts to meet the terms of the consent decree are complicated by a provision in at least one settlement that defines supportive housing (for people moved from an IMD or nursing home) as housing in which no more than 25 percent of the units are for tenants with disabilities.

An alternative to this strict definition is reflected in the fidelity model adopted in SAMHSA’s EBP KIT for Supportive Housing, which includes integration as one of several dimensions of fidelity. It emphasizes offering people choices, which would include: (1) scattered-site housing, (2) supportive housing in mixed-use buildings or apartment complexes that include both PSH and non-PSH units, and (3) buildings dedicated to PSH.

The court monitor for the Williams decree has been holding meetings to consider the pros and cons of various housing options, but for now the state must attempt to create supportive housing based on the narrow definition contained in the settlement. In much of the current stock of site-based PSH, more than 25 percent of units are set-aside for people who are homeless and/or have SMI, thus limiting the opportunities for many current PSH providers to provide housing that will meet the conditions of the consent decree settlement or to use financing mechanisms that may be created to achieve the goals of the consent decree.

6.5.3. Developing State Policy on Home and Community-Based Services and Negotiating a Medicaid Waiver Can Be Very Difficult

Two examples, one in San Francisco and one in Illinois, illustrate just how complicated it can be to use Medicaid waivers or SPA to take advantage of HCBS (see text box 8 and text box 9).

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