A Primer on Using Medicaid for People Experiencing Chronic Homelessness and Tenants in Permanent Supportive Housing. 8.2. The Focus of State Change Efforts


As more people who have experienced chronic homelessness get enrolled in Medicaid, states, health plans, and Medicaid providers will continue to learn more about their needs, and about opportunities to improve the quality of care and health outcomes for them while also managing costs. States that have expanded Medicaid eligibility will now have in their Medicaid program many newly eligible Medicaid beneficiaries who have experienced homelessness and have health care needs that are complicated by substance use disorders and other challenges related to mental health, trauma, isolation, and social service needs.

States and health plans are likely to learn a great deal about the types of services and supports that can help people engage in appropriate health care services, manage chronic health conditions, and reduce risky behaviors to achieve better health outcomes and avoid unnecessary hospitalizations. As they do so, they may want to consider making changes to the benefits and services included in their Medicaid programs, or request federal approval for waivers to develop and implement new approaches to health care that include coverage for diversionary services and tenancy supports. These approaches can achieve better outcomes while also controlling costs.

Often the benefits that states provide through their Medicaid programs are fragmented, in part because benefits have been added or modified by different administrators and stakeholders over a period of decades. This may result in different payment mechanisms for each piece of the package of services and supports needed by people who have experienced chronic homelessness, or gaps in Medicaid reimbursement for some of the services that are needed by this population and delivered in PSH. Many states have established separate benefits and program rules for Medicaid-covered medical care and treatment for mental health and substance use disorders. Often there are separate delivery systems and administrative structures associated with these Medicaid-covered services. To make innovative practices work within the Medicaid framework, states will need to examine, and likely modify, service definitions, medical necessity criteria, and specifications of which people can deliver which services and in which settings to make the services Medicaid-reimbursable.

Fragmentation of benefit design, program rules, financial responsibility, and delivery systems create challenges to delivering integrated, person-centered care for people with complex, co-occurring disorders, including people who have experienced chronic homelessness. State policymakers and Medicaid program officials recognize these challenges. Some are working on innovative approaches to support pilot programs or performance requirements that create more opportunities and incentives for health care providers and delivery systems to establish coordination mechanisms.

For example, states may require Medicaid managed care plans that are responsible for medical care to establish written agreements with counties or managed care plans that are responsible for Medicaid-covered mental health and substance use disorder services. These agreements can facilitate information sharing among the health plans and providers that work with the same Medicaid beneficiaries. This information sharing can be an important starting point for better care. For example, health care providers who prescribe medications or help a patient manage chronic medical conditions can make better clinical decisions if they know about other medications prescribed by a mental health provider.

States could require closer collaboration in the development of plans to provide care to people who receive services in separate systems. For now at least, these arrangements often focus on facilitating referrals, providing authorization for care and reimbursement, and limited information sharing among providers. These arrangements do not usually include mechanisms to support the integration of ongoing care by a multi-disciplinary team of providers working together to serve the same people. As states consider new approaches to care coordination, often in collaboration with Medicaid managed care health plans, there will be more opportunities to align and adapt benefits and payment mechanisms to support innovative approaches that integrate care at the service delivery level through teams or partnerships.

In some states, financial responsibility for the nonfederal share of Medicaid program costs is divided among different government agencies or between states and local governments, and the cost-sharing arrangements are different for medical care, mental health services, services for substance use disorders, and other Medicaid benefits. This can create incentives for cost-shifting, and it can make it difficult to align the incentives of government agencies to achieve overall savings in Medicaid program costs. For example, Medicaid-reimbursed mental health or behavioral health services delivered in PSH are likely to achieve savings in medical costs by reducing avoidable hospitalizations and emergency room visits. However, those impacts may not appear in the same budget that includes costs for the services in PSH. State leadership is often required to support the analysis of overall costs and savings to the Medicaid program and other public systems, and to use this analysis to inform policy decisions.

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