09/26/2013 - Why Permanent Supportive Housing and Managed Care Need Each Other

By Mike Nardone, Principal, Health Management Associates

The unprecedented changes now unfolding in the health care marketplace present supportive housing providers with opportunities to strengthen linkages with health care payers.  Mike Nardone

The expansion of Medicaid coverage under the Affordable Care Act (ACA) will mean that millions of currently uninsured adults will be eligible for coverage, including many formerly homeless individuals residing in supportive housing.

Likewise, the ACA encourages new models of health care delivery focusing on the “Triple Aim” of improving health outcomes, improving the patient care experience, and reducing health care costs. Delivery reforms that provide a more patient-centered, holistic approach to care, such as health homes, are consistent with the type of services provided in a supportive housing environment. And, as health care payers seek to improve care and control costs, they are increasingly focused on the five percent of Medicaid beneficiaries who represent 50 percent of program costs. 

Forging new health care partnerships, however, will require supportive housing providers to develop relationships with managed-care organizations (MCOs). More than two-thirds of Medicaid members are enrolled in some form of managed care and this number is on the rise as states increasingly rely on them to provide care for Medicaid beneficiaries with complex health care needs and to expand coverage pursuant to the Affordable Care Act.

This trend does have some advantages for supportive housing providers that are seeking to create linkages with health care providers. Generally, health plans have much more flexibility in funding services than traditional fee-for-service Medicaid. MCOs receive a per-member, per-month payment and choose how to allocate dollars within this capped amount. This creates strong fiscal incentives to design more effective care for high-need, high-cost individuals because MCOs are at risk if expenditures exceed their payment amount. MCOs are increasingly managing the health care of high-need populations who have historically not been on their rolls, such as individuals who are homeless and have chronic disabilities. Organizations that are on the frontlines, such as supportive housing providers, are uniquely positioned to assist MCOs with these populations.


Despite this potential, supportive housing services have typically not received MCO funding. Though the link between housing and better health outcomes may be intuitively understood, supportive housing providers will need to better leverage the impact of their services in order to fully engage health care payers and overcome previous barriers to partnership. Supportive housing does benefit from research documenting the significant improvement in health outcomes and reduced health care costs for residents, but the research alone is not likely to be sufficient to make the connection with payers. There is fierce competition for MCO investment in initiatives and services that have the potential for saving costs and improving health.  Given resource limits, MCOs will want to know what they are purchasing and have some level of confidence that it will help them meet their goals of increasing quality and containing costs.  

Making a successful business case will require clear articulation of the value supportive housing brings to MCOs, Medicaid agencies, and other health care payers.  This will include a clear definition of services provided within the supportive housing context and a description of how they align with the “Triple Aim” and metrics of particular importance to health care payers. Supportive housing providers will also need to collect data on these services to clearly demonstrate the level of activity and their potential contribution to improved health outcomes and reduced costs. They must also be prepared to make adjustments in their service offerings so that they tie more directly to metrics payers find important, such as reductions in avoidable hospital admissions. In this way, supportive housing providers will be better positioned to realize the promise of health reform and potential partnerships with MCOs to better serve supportive housing residents.




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