A Primer on Using Medicaid for People Experiencing Chronic Homelessness and Tenants in Permanent Supportive Housing. 6.2. Considerations for State Policymakers and Their Partners--New Ways to Think About Vulnerability and Medical Necessity


Unintended consequences may arise when states include specific types of disabilities or diagnoses in the definition of medical necessity for rehabilitative services or other optional Medicaid benefits that cover the services that can be delivered in PSH. One of these consequences may be to create incentives for housing providers to establish tenant selection criteria that incorporate specific types of disability, to ensure that the person qualifies to receive services that are covered by Medicaid so the PSH service provider can be reimbursed for the services delivered to the person living in PSH.

To facilitate the use of Medicaid reimbursement for services that can be delivered in PSH to vulnerable people who are experiencing chronic homelessness, states should align Medicaid reimbursement for services with the rules that govern housing assistance. This applies for states considering adapting medical necessity criteria for these services that focus on symptoms, functional impairments, and indicators of need that can be assessed consistently, regardless of the specific diagnoses or conditions that contribute to the symptoms or impairments. Taking this approach, a state could choose to provide Medicaid-covered rehabilitative services to a person who has cognitive impairments and difficulties with interpersonal and community coping skills that result from a brain injury, trauma, and a co-occurring serious substance use disorder, regardless of whether the person also has a diagnosis included in the definition of SMI.

Focus medical necessity criteria on symptoms, functional impairments, and indicators of need rather than on diagnoses.

In a growing number of communities, providers of health care, housing, and homeless assistance services are working together to prioritize access to PSH for the most vulnerable people experiencing chronic homelessness, including people living on the streets who are at greatest risk for mortality or those who most frequently use high-cost health care services in hospitals and institutional settings. Some of these vulnerable adults are people with a mental illness serious enough to qualify them to receive rehabilitative services. However, some people who experience chronic homelessness need similar services because they have complex, co-occurring health and behavioral health conditions that can result in avoidable hospitalizations or other crisis and institutional care. But because they do not have a SMI, they have not been able to access the intensive, face-to-face case management and interventions being used in models of care that Medicaid reimburses as rehabilitative services if state policies make these services available only for people with SMI.

A further consideration is the need of many people experiencing chronic homelessness to learn new skills as part of adjusting to living stably in housing in the community. In Medicaid terminology learning new skills--ones the person has never known how to do--is designated "habilitative" to distinguish it from rehabilitation, or relearning things that were once within the person's skill set but have been lost.85 Habilitative services are not covered under Medicaid's rehabilitative services option. However, if a state includes habilitation as part of its service definitions approved by CMS under these authorities, it may be part of services delivered under a HCBS waiver (1915(c)) or 1915(i) SPA, or as part of health home services or some other types of benefits. Innovative care coordination models often include helping clients learn new skills in addition to their attention to health and behavioral health care, as they promote the development of interpersonal and community coping skills and habits that prevent crises that might otherwise lead to hospitalizations, institutional care, or the loss of housing in the community. This chapter has described how some states are incorporating care coordination models for this population without SMI into their Medicaid programs. Other states could make similar changes, following or adapting these examples to their own situations to achieve the same effects.

View full report


"PSHprimer.pdf" (pdf, 1.43Mb)

Note: Documents in PDF format require the Adobe Acrobat Reader®. If you experience problems with PDF documents, please download the latest version of the Reader®