Medicaid Financing for Services in Supportive Housing for Chronically Homeless People: Current Practices and Opportunities. 7.1. How Does Managed Care Deliver Services Linked to Permanent Supportive Housing


Capitated financing and the quality or performance standards included in many managed care contracts change the financial incentives for health care providers. If reimbursement is no longer provided on a FFS basis for hospitalizations and emergency room visits, this creates incentives for the MCO or the network of health care providers under contract with the MCO to improve their coordination and management of health and behavioral health conditions to reduce use of these costly services and provide more cost-effective interventions. Under managed care arrangements, MCOs may be able to offer services that would not otherwise be covered as benefits under a state Medicaid plan, if these are effective substitutes for more costly covered services.41

During site visits and through supplementary contacts with programs in other parts of the country, we learned about a number of managed care arrangements:

  • In Massachusetts, the behavioral health carve-out managed by the MBHP (the carve-out’s MCO) has the flexibility to identify special need population cohorts and create special contracts with providers to cover their needs. A recent example of a specially-focused program is the CSPECH, in which MBHP collaborates with the Massachusetts Housing and Shelter Alliance. CSPECH is a demonstration that has expanded through MBHP contracts to fund nine partnerships with community organizations around the state to serve a total of 300 chronically homeless people with mental health and substance abuse problems who qualify for enrollment in MBHP-funded services.

    One of the CSPECH organizations, the BHCHP, provides a CSP for people experiencing chronic homelessness who are Medicaid-eligible. All have multiple chronic conditions and were identified as high-risk/high-user Medicaid clients. The program serves approximately 24 people, although more than 200 BHCHP clients would qualify for the program. Program goals are to stabilize people in housing and manage their medical and support needs, saving money on uncoordinated medical care to pay for supportive and case management services. Program elements include home care services, case management, and medical and behavioral health services, all covered by Medicaid. Housing subsidies are provided by HUD Housing Choice Vouchers.

  • Pennsylvania’s managed care behavioral health carve-out arrangement has allowed counties to achieve savings by providing community-based services that reduce the use and costs of inpatient hospital and other high-cost care. Single-county or local behavioral health managed care consortiums in nearly 50 counties have achieved savings that they been allowed to retain and devote to funding supportive housing for Medicaid enrollees under a cooperative arrangement with the Pennsylvania Housing Finance Agency. Funds have been used to leverage capital and operating/rental resources, one-time move-in expenses, and for supportive services. More than 3,000 people have benefited from these arrangements since 2008.

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