Medicaid Financing for Housing and Food

Medicaid Financing for Housing and Food – Lessons from Coverage of HCBS

The coronavirus pandemic has reinforced the relationship between health risks and poverty-related factors such as inadequate (or substandard) housing.  The purpose of this note is to discuss a potential path to Medicaid financing of housing, using Medicaid coverage of home and community-based services (HCBS) as a conceptual framework.

In its April 2018 meeting, MACPAC commissioners heard several approaches to permissible Medicaid financing of social determinants of health (SDOH) like housing, including:

• Medicaid managed care risk adjustment approaches that capitalize on new ICD-10 codes and other administrative data (such as census-tract information related to beneficiary  address) to redistribute capitation dollars based on SDOH-associated risk

• Value-based contracting models that encourage providers to invest in social interventions based on shared savings related to avoidable medical costs, typically avoided emergency department visits and hospital admissions

• Medicaid coverage of linkage services such as housing navigators and case managers to help support Medicaid beneficiaries who eligible for non-Medicaid social services

• 1115 demonstration waivers designed to evaluate whether social interventions reduce medical spending in a budget neutral way for federal and state taxpayers

• Contractually requiring managed care organizations (MCO) to invest administrative dollars built into capitation rates to cover social interventions (and then adequately financing the administrative portion of those capitation rates without jeopardizing the compliance with the minimum medical-loss ratio, typically 85%)

What isn’t explicitly allowed in any of these approaches, or generally within Medicaid, is direct financing of housing (or other SDOHs like food).

The path toward coverage of home and community-based services

Medicaid is designed to cover health care, not social supports.  The major exception involves HCBS to meet an individual’s long-term service and support (LTSS) needs.  Yet it’s important to remember that Medicaid did not cover HCBS until the Social Security Act was amended in 1981, more than 15 years into the existence of Medicaid.  Prior to that time, the only place to receive LTSS was inside an institutional setting of care, such as a nursing facility.

Eventually, families and advocates convinced Congress that, if it was cost effective for Medicaid beneficiaries to be served in an HCBS setting instead of inside an institution, receiving supports like attendant care and homemaker services, then Medicaid financing of HCBS should be permitted as an alternative to spending the same amount (or more) in an institutional setting.  This led to the enactment of the so-called 1915(c) waiver authority in 1981.  The new statutory language allowed for coverage of non-medical supports as a substitute for institutional costs, but the prohibition on Medicaid financing of housing and food, i.e., “room and board”, remains:

“[Medicaid may cover] part or all of the cost of home or community-based services (other than room and board) approved by the Secretary which are provided pursuant to a written plan of care to individuals with respect to whom there has been a determination that but for the provision of such services the individuals would require the level of care provided in a hospital or a nursing facility or intermediate care facility for the mentally retarded.” 42 US Code Section 1396n(c)(1) (bold added)

 Apart from the fact the prohibition on covering room and board perpetuates an institution bias – because the permissible Medicaid payment to hospitals, nursing facilities and other institutions includes payment for a patient’s housing and meals – there is an assumption in the law that other programs should be covering the cost of the beneficiary’s housing and food, notably because there was an assumption in 1981 that an individual only qualified for Medicaid because he/she was receiving cash assistance in the form of welfare or SSI, and the cash assistance therefore should cover housing and meals in community settings.

Fiscal concerns about a pure expansion for Medicaid coverage of housing and food

It would require a statutory change to the Social Security Act to permit explicit coverage of housing and food (outside the time-limited 1115 waiver authority).  The fiscal implications of covering SDOH would understandably be daunting and politically insurmountable – and not just to federal appropriators, but also to states, which would need to appropriate matching funds.  Moreover, any Medicaid service expansion will become increasingly difficult in the coming months and years even without a statutory change, as states confront a long-term structural financing challenge related to the coronavirus pandemic.

Design features:  risk stratification, cost effectiveness, and more

So, what is possible?  The answer might be found in the ground rules for the 1915(c) HCBS waiver authority.  In short, coverage for housing and food probably only has a path to coverage if it follows the conceptual framework that led to the creation of 1915(c) waiver authority:

• Eligibility at the individual level

• Individual coverage would be based on individual-level cost effectiveness – i.e., savings related to avoided medical costs, likely involving hospital admissions and frequent emergency department visits

• Any individual would need a unique plan of care – how much housing support?  How much food support? – that takes into account individual needs and gaps

• The eligibility would need to be supported by an analytic instrument that identifies that this individual person is predicted to utilize medical services that could be avoided (this element is the conceptual equivalent of the institutional level of care determination for an HCBS waiver participant)

The analytic instrument in the last bullet is the key that will determine the rest – how closely can we predict that but for housing and food supports, an individual will utilize thousands of dollars in avoidable medical costs?  Current risk stratification tools, often intended to identify individuals for high-touch social service supports from social workers and others, have not been designed or adapted to this purpose, although various experiments are happening around the country to fund housing and food supports for Medicaid beneficiaries.

As the risk stratification tools become more refined – and more to the point, designed with an intention of evaluating the efficacy of funding housing and food as a cost effective alternative to high utilization of hospital services – there might be an advocacy path to again amend the Social Security Act, much like the creation of 1915(c) waiver authority in 1981.

Other design features would be critical as well.  The additional design features would include:

• Duration of SDOH supports:  how long are the supports considered to be cost effective, relative to the individual’s avoided medical costs (e.g. hospital visits and admissions) in the individual’s baseline period prior to receipt of SDOH supports?

• Other supports while the individual is housed:  because coverage for a SDOH like housing presumably would have an individual time limit and not be a permanent benefit (e.g. 12 months of housing) related to the cost effectiveness of getting the individual into a stable situation, the individual would need other supports to promote self-sufficiency and the appropriate transition out of Medicaid-financed housing and into an alternative form of stable supports (e.g. a subsidized unit).

• Individual participation requirements:  for individuals receiving SDOH supports, what commitments would be expected regarding adherence to medical plans of care and self-sufficiency steps as a condition for receipt of SDOH supports – what is the enrollment and incentive/disincentive approach to place individuals in Medicaid-financed SDOH

• Housing and other vendors:  what conditions are imposed on housing and other vendors, such as landlords, as a condition of accepting Medicaid financing (e.g. a requirement to help an individual transition to other forms of housing subsidies at the time of transitioning out of Medicaid supports, such as after 12 months)

These design features (and more) would be essential to support any business case for a statutory change to Medicaid to allow coverage of SDOH based on cost effectiveness.  The various approaches now being piloted to support SDOH for Medicaid beneficiaries – funded by CMS innovation grants, foundations, insurers, and others – could be developed with an eye on making the case for a statutory change, following the conceptual approach that led to 1915(c) waiver authority coverage of non-medical LTSS supports.

For more information

Presentations from the April 2018 MACPAC meeting on current Medicaid approaches to financing SDOH:  https://www.macpac.gov/wp-content/uploads/2018/04/State-Approaches-to-Financing-Social-Interventions-through-Medicaid.pdf