Arizona Medicaid insurers combat homelessness

March 15, 2019


Recognizing the role stable housing plays in a person's physical and mental health, Mercy Care in Phoenix has joined a growing number of Medicaid insurers providing housing or housing services through community partnerships.

Mercy Care, a not-for-profit health plan owned by San Francisco-based Dignity Health and St. Louis-based Ascension, provides Medicaid and Medicare managed care coverage primarily in Maricopa County, Ariz., where Phoenix is located. (Dignity Health combined with Catholic Health Initiatives in January to create CommonSpirit Health.)

Since 2014, Mercy Care — through partnerships it has developed with government agencies and with other nonprofits — has improved and expanded housing options for its members enrolled in Medicaid, said Tad Gary, the health plan's chief operating officer.


The Henry J. Kaiser Family Foundation published an issue brief in January 2017 that focused on Mercy Care's housing initiatives in Arizona. It said: "The growing emphasis on integrated care models that address not only health but also the social determinants of health, including housing, is spurring widespread innovation in state Medicaid programs and the delivery systems they rely on."

By joining forces with community partners, Gary said, Mercy Care has grown the number of housing subsidies available in Arizona at any given time to more than 3,500 — compared to the starting point of 104 subsidies in 2014. Mercy Care relies on state funding to provide such rental assistance.

"That total really in terms of housing program size, makes us the third-largest housing program in the state of Arizona," said Andrea Bell, housing integration administrator for Mercy Care.

Medicaid-housing link
Federal law bars federal matching of state Medicaid spending for room and board, but the federal match money can pay for a host of other housing-related services and activities for individuals covered by Medicaid, authors of the Kaiser foundation report said.


Medicaid was expanded under the Affordable Care Act to previously ineligible uninsured adults whose income is as much as 138 percent of the federal poverty level. The authors of the Kaiser report said Medicaid expansion under the Affordable Care Act significantly increased the potential impact of "Medicaid housing collaborations." Arizona is one of 37 states to expand Medicaid coverage under the ACA.

In Maricopa County and parts of Pinal County, Ariz., Mercy Care and its partners offer a permanent supportive housing program to Medicaid members with serious mental illness who would otherwise be homeless.

Mercy Care's housing initiatives fall within three general categories, Bell said. The first is nonclinical, Medicaid-funded support services, such as helping enrollees understand their lease paperwork. The second involves the use of state funding toward rental assistance, including for its permanent supportive housing program, and housing-related services. And the third utilizes state housing trust fund dollars to acquire, develop and rehabilitate properties to increase affordable housing capacity.

Mercy Care initial housing assistance work was aimed at improving housing security for individuals with serious mental illness. But during the last two years it has expanded that focus to include people with general mental health issues and those with substance use disorders.

Under the program, Mercy Care provides rent subsidies for its Medicaid enrollees to live in a house or apartment owned by Mercy Care's housing network, a private landlord or the public housing authority.

A January 2018 review of medical services used by Mercy Care clients who used vouchers to rent private housing found a 20 percent decrease in psychiatric hospitalizations after people in the study achieved housing security. General inpatient hospitalizations and emergency room visits showed little change, the report found.

In an example of its use of state housing trust fund allocations, Mercy Care teamed with the group Native American Connections to develop a 54-unit supportive housing community in central Phoenix. The Camelback Pointe development, to which Mercy Care provided $200,000 to help fund 13 of the units, allows people to live independently while improving their health and housing stability. It opened in January 2018. Mercy Care is invested in six affordable housing developments.

"We deliver integrated health services in housing because we know that housing plays a major role in improving our members' health and well-being," Gary said. "Our goal is to help our members live a healthier life and achieve their full potential. Stable housing is the foundation of that."

UnitedHealthcare weighs in
Elsewhere in Phoenix, UnitedHealthcare Community Plan of Arizona provided a $22 million, below-market rate loan to the community development corporation Chicanos Por La Causa to refurbish two apartment complexes totaling 500 units in the Maryvale area. The apartments are marketed at rents that are affordable to low-income individuals; 100 units are set aside for homeless individuals who have health insurance through UnitedHealthcare's Medicaid health management organization.


The loan came from UnitedHealthcare, said Joe Gaudio, chief executive of UnitedHealthcare Community Plan. "It wasn't tax credits," he said. "It wasn't HUD (the U.S. Department of Housing and Urban Development). It wasn't anything like that, which means we don't have the same restrictions" as a loan using federal housing dollars, such as restrictions on renting to recent parolees from prison, Gaudio added.

Because UnitedHealthcare made the loan with regulated capital off its balance sheet, Gaudio said, the company first had to get permission from the Arizona Health Care Cost Containment System — the state's Medicaid agency. No similar approval was required from the federal Centers for Medicare and Medicaid Services, he added.

"Really, what we were asking for was permission to make this loan and have it included as an admissible asset," Gaudio said, "and (the state) approved it, which was great to see."

Under the deal, the rent on 400 of the units subsidizes the remaining 100 units, which UnitedHealthcare reserved for patients with the greatest needs, Gaudio said. Depending on their circumstances, these individuals may get the units rent-free or get a 50 percent discount on rent, with the goal of moving them up to full rents as their circumstances stabilize.

Loan impact
"What we expect to see is improved health outcomes, improved quality of life, and a significant reduction in health care costs," he said.

So far, UnitedHealthcare has recorded a 58 percent reduction in total health care costs for Medicaid enrollees who lived in the subsidized apartments, Gaudio said. Twenty-five tenants have "graduated" from fully subsidized rents to paying full rent or moving to another complex. The apartments are at full capacity, he added.

One of the largest sources of referrals to the subsidized apartments is Circle the City, a nonprofit organization that was incubated by Dignity Health St. Joseph's Hospital and Medical Center in Phoenix. Circle the City has two, 50-bed respite care centers for homeless patients, two family health centers and a mobile clinic.

James, 51, who asked that his last name not be used, moved into a one-bedroom apartment in the Chicanos Por La Causa complex in October 2017 after recuperating from hip surgery at Circle the City. There is little doubt in his mind that without the subsidized apartment, he would have been homeless.

"They can help a guy like me who went from having a job and career and an income to having no income, physically challenged, laid up, unemployed," he said. "And rather than being homeless or dependent on the hospital system, the Medicaid system, they get a roof over your head and chance for you basically to get your stuff together and try to progress."


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