Medicaid Programs Start to Embrace Respite Care for Unhoused

Earlier this year, a homeless woman in her 40s who was living in her car went to the emergency department of a hospital in Orange County, California. She was found to have stage 2 ovarian cancer. Since she had no home to return to upon discharge, the hospital referred her to the Illumination Foundation, a not-for-profit housing organization.

The foundation staff evaluated the woman’s needs and admitted her into its 150-bed recuperative care center for homeless people in Fullerton, Orange County. The woman’s Medicaid health plan covered the cost. The staff connected her with a primary care physician and an oncologist to arrange chemotherapy. She’s now receiving treatment and in stable condition. She’ll remain in recuperative care while the staff works on finding her permanent housing, according to Pooja Bhalla, D.N.P., the foundation’s co-CEO.

On any given night in the United States, an estimated 580,000 people are unhoused. If they are injured or recovering from surgery or serious illness, they have no safe place to recuperate. As a stopgap measure, hospitals and clinics sometimes give recuperating patients a public transit pass to use all day or tell them to rest at a public library. Patients without housing often return to the hospital emergency department or are readmitted to the hospital. The health outcomes are worse than for patients who have housing and the medical expenditures are higher.

In response, community health centers, homeless shelters, hospitals and other organizations have launched 133 medical respite programs, such as the one used by the woman in Orange County, for homeless people in 35 states and the District of Columbia, and more are starting up, according to Barbara DiPietro, Ph.D., senior policy director at the National Health Care for the Homeless Council.

There’s no one way to operate a respite program. Some programs, particularly those affiliated with hospitals and clinics, are staffed by licensed medical professionals. Others use nonlicensed staff and bring in physicians, nurses and therapists to provide care. Many accept only patients who can perform the activities of daily living on their own and don’t have serious mental illness.

“We believe the value is really obvious, from the perspective of avoiding readmissions, providing better care and giving people the opportunity to recover,” says Leanne Berge, CEO of Community Health Plan of Washington in Seattle, a not-for-profit insurer that operates Medicaid managed care and Medicare Advantage plans.

The obstacles

But there are far too few of these programs to serve all homeless people across the country who need housing and support during recuperation. A number of factors are limiting their growth, experts say. It’s a cumbersome process for Medicaid plans to win state approval for covering these services, and many plans still don’t pay for it. Starting a medical respite program requires cooperation from a variety of community stakeholders, including neighborhood residents, and that can be challenging. Plus, there aren’t yet robust national data showing that these programs produce overall cost savings and improved outcomes. A 2021 literature review published by the National Institute for Medical Respite Care, however, found that without respite care, homeless patients have longer hospitalizations and suboptimal outcomes, and that respite care resulted in cost savings for hospitals.

“It’s complex, takes time and requires broad thinking about how to work with partners,” says Karen Dale, CEO of AmeriHealth Caritas District of Columbia, whose plan helped launch a medical respite program called Hope Has a Home in Washington, D.C., in 2019. Another hurdle, she says, is that Medicaid plans “worry that if they invest and do all this work and the person is no longer a member, someone else benefits.”

On top of that, 12 states have yet to expand Medicaid under the Affordable Care Act, making it much harder for respite programs for the homeless in those states to fund their services because Medicaid is the main source of coverage for people without housing.

Because Tennessee hasn’t expanded Medicaid, “people in our unhoused community are using the emergency room as their primary care provider, raising costs,” says Julia Sutherland, executive director of The Village at Glencliff, a medical respite program for homeless people near Nashville. “That means we spend hours sitting with our folks in the ER when we could be helping them find housing, benefits and a job or taking them to the eye doctor.”

Lacking Medicaid reimbursement, her program relies on support from a sponsoring church and contracts with local hospitals to serve their discharged patients in 12 individual homes in the church’s former parking lot. But having no coverage makes it very difficult to get participants into substance use treatment. “It’s a tough thing to tell someone who wants help that they’ll have to wait,” Sutherland said.

Lighting the way

Illumination started its medical respite program for homeless people 12 years ago when local hospital leaders in Orange County realized they needed a safe place to discharge people without housing, explains Bhalla. They asked Illumination to start a program.

The foundation built a 150-bed facility in Fullerton with an affiliated medical practice upstairs staffed by physicians, including psychiatrists, and nurses. It also established a 50-bed stand-alone facility in Riverside County and supports recuperative care in motels in Los Angeles County.

Incentivized by the California Advancing and Innovating Medi-Cal program, a number of Medicaid plans have agreed to reimburse the foundation for the housing, case management and behavioral health and substance use treatment it provides. They see evidence that the program improves enrollee outcomes and reduces costs.

For instance, annual emergency department visits by homeless people enrolled in the CalOptima health plan dropped by 22% and inpatient admissions declined by 26% one year after completion of services at Illumination, according to a study that Illumination conducted in partnership with CalOptima. Total per member per month costs declined 23%.

While some Medicaid plans such as CalOptima are promptly approving enrollees for coverage in the foundation’s respite program, others are stingy about approvals, particularly in Los Angeles County, says Bhalla. “Our beds are staying empty because those plans aren’t referring patients,” she said. “So hospitals have patients showing up at the ER who don’t need to be admitted.”

At least seven medical respite programs in five states currently are receiving payment from Medicaid plans, and at least three states — California, Utah and Washington — are moving to have their Medicaid programs cover it as a standard benefit, says DiPietro.

Medicaid reimbursement

Medicaid plans reimburse respite programs in different ways. Yakima Neighborhood Health Services, a federally qualified health center in Washington, which launched a respite program in 2010, receives a per-diem rate with an annual cap per patient from one plan, says CEO Rhonda Hauff. Two other plans pay a case rate with either an annual cap or a two-year cap per patient, she says.

The average cost for respite services at the Yakima program’s two five-bed facilities is $140 to $160 per day, not including the primary care and behavioral care provided at the clinics. Add those and the total is $350 to $400 a day. Three of the four Medicaid plans serving the Yakima area in central Washington have voluntarily agreed to cover the services. “The state is pushing (Medicaid plans) to move people out of hospitals,” notes Berge. “It makes so much sense to develop these alternative settings.”

Hauff has found that medical respite can serve as an entry point for homeless people who previously refused medical and behavioral care, shelter and other services. “It’s often the most vulnerable time in their lives, when they’re feeling particularly fragile,” she says. “As they start feeling better, they look to our staff to help them find stable housing, employment, clothes and benefits like disability. That’s the road to recovery.” A major problem for her program and others, however, is that permanent housing spots are in short supply and many clients return to the streets or to a shelter. “If we kept everyone until housing was available, we wouldn’t have enough capacity in respite to help people recuperate from their acute condition,” Hauff says.

D.C. program

AmeriHealth Caritas DC embraced the medical respite approach after the Medicaid agency for Washington, D.C., shifted in 2016 to pay-for-performance contracts that penalize plans for excessive hospital readmissions and emergency department visits. But Dale says the effort was primarily driven by a desire to improve healthcare and reduce disparities for poor people in D.C.

Since it opened, Hope Has a Home has served 161 male patients referred by local hospitals in its two eight-bed facilities, Dale says, including enrollees from all three Medicaid plans in D.C. A preliminary study found that AmeriHealth Caritas reaped a 19% return on investment through reductions in preventable hospital admissions, 30-day all-cause readmissions and low-acuity emergency department visits. Dale says her goal now is to open additional facilities for women, including pregnant women.

“Medical respite is a great solution to address social determinants of health,” she comments. “It should be explored by more insurers to build out the healthcare delivery system in many places.”

Harris Meyer is a freelance journalist in Chicago who covers healthcare.